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Tuesday, June 26, 2012

[CPSI NewsWire: SouthGobi Q2 Mining Curtailed, But Expects 200-300K Tonnes Sale in Q2]

CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, Western Australia based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.

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SouthGobi Resources Provides Operating Update

HONG KONG, CHINA--(Marketwire - June 25, 2012) - SouthGobi Resources Ltd. (TSX:SGQ)(HK:1878) ("SouthGobi") operations continue to be effected by a number of external factors including regulatory issues in Mongolia and deteriorating market conditions.

Regulatory issues in Mongolia

On April 16, 2012, SouthGobi announced that the Mineral Resources Authority of Mongolia ("MRAM") held a press conference announcing a request to suspend exploration and mining activity on certain licenses but no official notification had been received. At this time, the Company remains in the position where no official notification has been received and therefore there is no legal impediment to continued operation. However, SouthGobi continues to be impacted by issues associated with the public announcement regarding its licenses.

There are multiple ways SouthGobi is being affected by the uncertainty over its licenses with various levels of impact. Many government bodies and regulatory authorities in Mongolia are reluctant to provide approvals and permits due to the uncertain position. One example is that SouthGobi's Mongolian operating subsidiary has been unable to receive an approval for a revision to its Environmental Impact Assessment for the dry coal handling facility ("DCHF") from the Mongolian Ministry of Environment. Without such approval, SouthGobi may be unable to operate the DCHF.

The Mongolian Minister of Mineral Resources and Energy ("MRE") commented at a press conference on May 30, 2012 "the temporary suspension has been lifted, but regarding the new law, the license of Ovoot Tolgoi will be discussed by the cabinet and parliament". Subsequently we have written to MRAM and the MRE requesting official clarification. However, to date no such clarification has been received.

China market conditions

For late 2011 and through most of 2012, coking coal prices in the inland China markets closest to SouthGobi's operations remained fairly stable and somewhat insulated from the price declines of reference coking coal prices in the seaborne market. However, in recent weeks the Company has observed a substantial deterioration in sentiment among its customers and a decline in reference prices in key end-use markets. For example, after remaining constant for all of 2012, the reference price for one-third coking coal in Wuhai, Inner Mongolia fell by RMB20/tonne on April 23 and then fell a further RMB30/tonne on June 18. Further east in Baotou, Inner Mongolia, the reference price for clean coking coal started falling in late May and has now fallen by RMB110/tonne.

Customer behaviour and impact on SouthGobi's sales and operations

Most of SouthGobi's coal is sold to its largest customers on the basis of quarterly sales agreements. Customers agree to purchase coal according to their projected volume and specification requirements. The sale is completed when the Company delivers the coal into a customs-bonded stockpile facility at the Ovoot Tolgoi Mine for the customers to manage their own collection and export.

During the second quarter of 2012 customers were reluctant to enter into meaningful new purchase commitments for a number of reasons, including:

      i.        Customer's ability to transport so far this year was below their projections due to: the delay in the opening the expanded border crossing capacity by authorities until May; extended border holiday closure in the first quarter; and the closure of the export road for over four weeks in April and May for repair. As a result, customers accumulated more inventory of pre-purchased coal on the Mongolian side of the border.

     ii.        Lack of clarity over whether SouthGobi may receive a formal license suspension at some stage has customers fearful that they would be unable to collect and export additional purchased coal from Ovoot Tolgoi Mine.

    iii.        Deteriorating market conditions.

SouthGobi's customers have been focused on physical shipment and now that the border capacity expansion is open physical coal transportation is well above prior records. The Company expects that for June alone (the first full month with expanded border capacity), approximately 500,000-600,000 tonnes of Ovoot Tolgoi Mine coal will be transported to China, albeit mostly coal from customer inventory. However, the Company's current estimate for new coal sales for the second quarter of 2012 is between 200,000 tonnes and 300,000 tonnes.

In terms of operations, SouthGobi has curtailed its mining activity at Ovoot Tolgoi Mine at various levels during the second quarter of 2012 to ensure the Company does not build significant unsold coal inventory and to maintain efficient levels of working capital. SouthGobi currently estimates that total coal mined for the quarter will be approximately 200,000 tonnes. As at the end of the quarter, the operation will be entirely curtailed.

Outlook

At this time SouthGobi believes it is difficult to estimate coal sales volumes and pricing for the third quarter of 2012. It does appear that customers have robust volume appetite for the third quarter, particularly as the Company's largest customer has now exhausted pre-purchased coal inventory. However, achieving mutually agreeable contracts is difficult in the context of the regional coking coal market conditions.

With the difficult conditions of the second quarter and the uncertainty regarding how the third quarter may evolve, the Company cautions that at this time sales volumes, pricing and production volume outcomes for the full year of 2012 cannot be estimated.

In addition to the curtailment of mining operations, SouthGobi has suspended uncommitted capital expenditure and exploration expenditure. These initiatives have been taken to preserve the Company's financial resources.

Link to release

 

Mired in Uncertainties, SouthGobi Deal Further Dimmed by "Fraud" Accusation

June 20 (NAI) Already troubled by the resource-conservative Mongolian policies, SouthGobi Resources' (HK:1878, TSX:SGQ) intended sale to Chalco has just got a muddy twist. Liu Xin, a self-claimed mining engineer and former employee of SouthGobi, publicly accused SouthGobi of frauding reserve data. The "fraud bomb" was dropped right on time: with several positive signals in place, Chalco is set to make the formal purchase offer on July 5th.

The situation started to develop last Thursday, when Mr. Liu mailed a group of investment banks, brokers, and consulting companies accusing SouthGobi's flagship Ovoot Tolgoi coal project as being a "fraud". According to Chinese media, the letter cited large amount of data and diagrams to substantiate the claim. On the same day, Mr. Liu also opened a dedicated blog to increase the publicity of his allegation, on which he swore to the truthfulness of his claims and willingness to assume legal responsibility.

According to Mr. Liu, he participated in exploration drillings with SouthGobi in 2008, and found far less coal content than the company currently claims: "we made 41 drilling holes totaling over 23,000 meters. The result is surprising that some drills went directly into rocks". Mr. Liu claimed that while SouthGobi reported Ovoot Tolgoi to contain 300 million tons of coal with measured and indicated resources combined, the real number might be around 70 million tons at most. The discrepancy, according to Mr. Liu, was also noticed by Norwest, a Vancouver engineering company, yet SouthGobi's "crisis management" hid the fact through bribery. Mr. Liu claimed to have left SouthGobi this March for "not fitting in the culture".

While relatively unheard of (as yet) in North America, Liu Xin's letter stirred great media attention in China, much owning to Chalco's popularity as a blue chip in the country. China's First Financial interviewed the management of SouthGobi, who claimed that Liu's allegation is an act of fraud. While rejecting all of Mr. Liu's claims, SouthGobi further denied Liu ever worked for the company. First Financial also noted that Mr. Liu has failed to show up for a media conference set to take place in Beijing on June 18th. The financial institutions that received Liu's letter are also unable to reach him in person. Chalco is yet to comment on the issue.

Despite far from substantiation, the public letter is likely to cause pressure on Chalco in the Chinese market. Being an overseas acquisition "debut" for Chalco, the SouthGobi deal has been a major point of excitement for investors. Previously, Mongolian government casted a heavy shadow over the case by suspending the deal to limit foreign ownership in natural resources. The situation only improved recently with the authorities relaxing its position and showed willingness to reconsider the suspension. Against this background, Mr. Liu's letter is certainly a matter of concern for both Chalco and SouthGobi.

Link to article

Related:

Mongolian coal company accused of exaggerating depositsWant China Times, June 20

 

Mongolian Mining Drops To Record Low On Investment Rule Concerns

June 25 (Bloomberg) Mongolian Mining Corp. (975), the nation's biggest coking coal exporter, slumped to a record low on speculation investment rules will be tightened after this week's parliamentary elections.

The Hong Kong-listed coal producer fell 3.1 percent to HK$4.70 at the close, the lowest since the shares started trading in October 2010. Modun Resources Ltd. (MOU), an Australian company that's developing a thermal coal project in Mongolia, fell 6.7 percent in Sydney and Xanadu Mines Ltd. (XAM) dropped 4.9 percent. SouthGobi Resources Ltd. (SGQ) fell 1.23% in Hong Kong.

There's growing concern among Mongolia's citizens about the way politicians are handling the country's mineral resources. Lawmakers, seeking to control ownership of assets, approved a law in May requiring parliament to approve deals in which overseas investors hold more than 49 percent of the equity and for transactions exceeding $75 million in strategic sectors, including mining.

"Whatever the result will be, there will be a deterioration in the investment climate in Mongolia," said Stanislav Chuyev, an analyst with Visor Capital Joint Stock Co. in Almaty, Kazakhstan. "There's just a risk that in the future, companies will be required to transfer more funds to ordinary people in the form of corporate social responsibility."

Mongolian Mining spokeswoman Khatantuul Tuvdendargaa, based in Ulan Bator, declined to comment when contacted on her mobile phone.

"We're in a pre-election phase in Mongolia, so the investment community is waiting to see what happens," said Chris Mardon, managing director of Subiaco, Australia-based Modun Resources. Calls to Xanadu's Sydney office and SouthGobi's Vancouver office outside working hours weren't answered.

The passage of the law curbing foreign investment was accelerated after a public outcry following moves in April by Aluminum Corp. of China Ltd. to buy SouthGobi Resources. Parliamentary elections are scheduled in Mongolia on June 28.

Mongolia has gold, iron ore, copper and coal, and its 10 biggest mineral deposits are worth more than $1.3 trillion, according to estimates by Quam Asset Management.

Link to article

 

Rio Tinto expects funds for Oyu Tolgoi expansion lined up by Dec

* Early production at Oyu Tolgoi to begin end of August

* Power supply problems likely to be resolved soon

ULAN BATOR, June 22 (Reuters) - Financing to expand the $13 billion Oyu Tolgoi copper mine in Mongolia is likely to be locked in by the end of the year, said an executive with the mine's operator Rio Tinto .

Investment in Oyu Tolgoi helped drive growth in the central Asian country to 16.7 percent in the first quarter of 2012 and may already account for more than a third of Mongolia's economy.

"We are currently in the process of working with banks, and have been for a couple of years, to put in place the world's largest ever project finance raising for the industry and hopefully in the next six months we will conclude that," Cameron McRae, Mongolia country manager for Rio Tinto and chief executive of Oyu Tolgoi LLC, said in an interview on Friday.

Oyu Tolgoi began development in 2009 after a landmark investment agreement gave 66 percent of the project to Canada's Ivanhoe Mines. Rio Tinto now has a majority stake in Ivanhoe and has full operational control over the mine.

The project has already cost $7 billion in capital investment, and Ivanhoe in March estimated the second phase may cost more than $5 billion, heaping pressure on the Anglo-Australian mining giant.

The project is on track to begin producing ore by the end of August, six months ahead of an original schedule, and it will go into commercial operation next year, McRae said at his office in Ulan Bator.

But in a remote desert region bereft of infrastructure, much still depends on securing electricity from neighbouring China.

McRae said he expected commercial agreements with power generators in the Chinese region of Inner Mongolia to be completed on time but conceded that geopolitical concerns between China and Mongolia had slowed the process.

Rio Tinto expects to be given the go-ahead to build its own onsite power plant within the next few weeks.

In an ideal world, it should have started sooner, McRae said, but it would have pushed capital expenditure up by another $1 billion and put further pressure on the project's strained foreign shareholders.

"The initial $7 billion was all being funded by foreign shareholders and we haven't gone to external debt. I think the capacity of the shareholders was pretty well maxed out."

POLITICAL RISKS

Investment in Oyu Tolgoi could already make up 35 percent of the country's total economy, McRae said.

But the role played by foreign investors in Mongolia's burgeoning mining sector has been subject to criticism, especially ahead of next week's parliamentary elections.

Last year, nationalist backbenchers called on the government to demand an increased stake in Oyu Tolgoi. Investors are also concerned about the popularity of former President Nambar Enkhbayar, who has campaigned for the 2009 deal to be renegotiated.

In May, nationalist backbenchers passed a new law that would subject foreign investments in "strategic" sectors to greater regulatory oversight, a move thought to have been designed to prevent Ivanhoe from selling a majority stake in its subsidiary SouthGobi Resources to Chinese metals giant Chinalco.

"The law is not a bad thing," said McRae. "But what is important for Mongolia is how they finalise it and what regulations are in place so it becomes a good law that attracts foreign investment and enables domestic investment to occur."

McRae said hostility to foreign investment was overstated.

"The interesting point in this election is that there are quite a lot of politicians and partners that are out there putting the pro-foreign investment view forward," he said.

Link to article

 

Voyager Resources: Letter to Shareholders

June 25, Voyager Resources Limited (ASX:VOR) --

Dear Shareholder

Voyager Resources Limited – pro-rata non-renounceable entitlements issue

As announced on  15 June 2012 Voyager Resources Limited (ACN 076 390 451) (Voyager) is undertaking a 1 option for every 3 shares held pro rata non-renounceable entitlements issue (Entitlements Issue or  Offer) of  approximately  446,373,854 options (New Options) to raise approximately $4.464 million. The price of New Options under the Offer is $0.01 each (Issue Price).  The Company lodged a prospectus for the Offer (Prospectus) with ASIC and ASX on 21 June 2012.

The Offer is fully underwritten by CPS Securities (Underwriter). 

Funds raised under the Offer will primarily be used to focus on additional drilling programmes and the application of a mining licence at the Company's KM Copper Project in Mongolia.

Additional expenditure will also be allocated towards the Company's Daltiin Ovor and Khongor Copper and Gold Projects.

The Offer is being made to all shareholders of the Company (Shareholders) named on its register of members at  5pm on 2 July 2012, whose registered address is in Australia or New Zealand.

A copy of the Prospectus is available on ASX's and Voyager's website.  Eligible Shareholders will be mailed a Prospectus together with an Entitlement and Acceptance Form  on  5 July 2012.  Your entitlement will be set out on the personalised Entitlement and Acceptance Form accompanying the Prospectus.

For the purposes of calculating each Eligible Shareholders' entitlement, fractions of entitlements have been rounded up to the nearest whole number of New Options.

Actions required of Eligible Shareholders

There are a number of actions Eligible Shareholders may take:

      You may wish to accept all of your rights to subscribe for New Options pursuant to the Prospectus (Entitlement). To take up all or some of your Entitlements you will need to ensure your application money for the Entitlements you wish to take up is received by Advanced Share Registry Services (Share Registry) by no later than 5pm WST on 20 July 2012, by completing and returning your Entitlement and Acceptance Form together with your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the amount indicated on the Entitlement and Acceptance Form or making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form.

      You may wish to accept part of your Entitlement. To take up part of your Entitlement you will need to ensure your application money for the Entitlements you wish to take up is received by the Share Registry by no later than  5pm WST on  20 July 2012, by completing and returning your Entitlement and Acceptance Form by filling in the number of New Options you wish to accept in the space provided on the Entitlement and Acceptance Form together with your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the amount indicated on the Entitlement and Acceptance Form or making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form (at $0.01 per New Option).

      You may do nothing.  If you choose to do nothing with your Entitlements, while you will continue to hold the same number of Shares, your interest in the Company will be diluted and you will receive no value for your Entitlement.

Key dates for the Offer

Lodgement of Prospectus with the ASIC                                 21 June 2012

Lodgement of Prospectus & Appendix 3B with ASX                 21 June 2012

Notice sent to Optionholders                                                   25 June 2012

Notice sent to Shareholders                                                    25 June 2012

Ex date                                                                                    26 June 2012

Record Date for determining Entitlements                              2 July 2012

Prospectus despatched to Shareholders                                 5 July 2012

Closing Date*                                                                           20 July 2012

Securities quoted on a deferred settlement basis                   23 July 2012

ASX notified of under subscriptions                                         25 July 2012

Despatch of holding statements                                              30 July 2012

If you have any queries concerning the Entitlements Issue, or the action you are required to take to subscribe for New Options, please contact Aaron Bertolatti, Voyager's Joint Company Secretary, on +61 8 9200 6264.

Link to release

Letter to Optionholders

 

Haranga: Board Appointment: Lippo Group Nominee   

June 26 -- Haranga Resources Limited (ASX:HAR) announces the appointment of Mr. Marshall Cooper to the Company's Board as a Non-Executive Director.

Mr. Cooper has been invited to join the Board of Haranga Resources as the representative of the Lippo Group, currently the Company's largest shareholder. Lippo currently hold 15.3% of the Company's issued share capital via their subsidiary Golden Rain Holdings Limited.

Mr. Cooper has been a Director of Lippo Group since 1998 and has held various executive roles in their  Mining, Media and Telecommunications divisions including Chief Financial Officer and Chief Executive Officer of various business groups from the TV and internet services division, Chief Executive of Globe Media, and Director of Asia Now Resources Corp listed on TSX Venture Exchange.

Mr. Cooper is currently the Director and Chief Operating Officer (COO) of Lippo Energy, which is involved in developing a global minerals and mining portfolio within the Lippo Group, currently focusing on copper, iron ore, coal and gold. His primary role involves guiding the development of the business unit and he is directly involved in project acquisitions, management of exploration programs, project development, corporate M&A and arranging project funding.

Mr. Cooper has over twenty-five years of experience operating in Asia and Australia. Prior to joining the Lippo Group, he worked for the international mining group CRA (now Rio Tinto) holding senior commercial roles in bauxite and precious metal operations in Australia and Indonesia. Mr Cooper will bring his extensive experience in mining development, operations, corporate finance and public company board experience to Haranga Resources.           

The Company is fortunate to be able to add someone of Mr. Cooper's experience and expertise and it is expected that Mr. Cooper and the Lippo Group will be of great assistance in  the successful development of the Company's Selenge iron ore project.

Link to release

 

Desert Eagle Announces Claim Filed Against it in California

TORONTO, ONTARIO--(Marketwire - June 22, 2012) - Desert Eagle Resources Ltd. ("Desert Eagle" or the "Company") (TSX VENTURE:DER) announces a complaint for damages and injunctive relief with respect to an action for defamation has been filed against the Company in the State of California in the United States District Court, Central District of California. The Company does not have an operations or assets in California and believes this claim to be without merit and is in the process of preparing its defence in response to this action.

Link to release

 

U.S. Mining Firm Secures Mongolian Lithium Supplies

June 23 (Hybrid Cars) San Antonio-based Nova Mining Corp. (OTC:NVMN) announced this week that it has received very encouraging due diligence documents, including third-party lithium estimate reports and government license documents, regarding the Bayankhongor mining property.

The Bayankhongor property is one of three major licensed lithium fields owned by Mongolian National Mining Consultants Limited (MNMC).

Last Monday, Nova Mining Corp moved to secure valuable lithium supplies by executing a letter of intent with MNMC for the exclusive right to purchase 100 percent of the lithium produced from the MNMC mining properties at a discount to market price.

Mongolian National Mining Consultants Limited is a Hong Kong company, with its principal business operations in Ulaanbaatar, Mongolia. MNMC is the registered owner of multiple mining properties that are located in Mongolia. Recent Surveys of MNMC's mining properties indicate significant quantities of commercially recoverable Lithium reserves.

Nova Mining Corp. seeks out the most potentially lucrative mining projects and supplies of strategic high-demand minerals, such as lithium, as part of its newly-instituted aggressive business model. Lithium is the main ingredient in long life batteries, like those used in many of Apple's electronic devices, Microsoft's new Surface tablet and General Motor's new Volt electric automobile.

Lithium is currently in very high demand and is forecast by MarketResearch.com to quadruple from an $11 billion market to $43 billion market.

Link to article

Link to NVMN release

 

Bestway: Annual Report 2011

June 22, Bestway International Holdings Limited (HK:718) --

Mining Business

During the year ended 31 March 2012, there was no active operation of the Group's mining business. In order to obtain a more reliable estimation for the development of the Mongolian tungsten resources, the management has intended to engage a qualified mineral technical adviser to obtain a resource estimation based on international reporting standards, which is in line with the requirements under chapter 18 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and to provide further assistance in the design of the exploration programs in respect of the tungsten mines. The management was given to understand that the additional exploration work for the purpose of the resource estimation will include re-drilling and re-sampling. Considering the addition work to be done as described above, the estimated time required to obtain a technical report on the tungsten mines and the relevant fundraising activities of the Company, the expected production schedule will not commence within the next 12 months. In this respect, the Group will continue to renew the mining licences and comply with the requirements of the Law on Mineral Resources of Mongolia.

In May 2012, the Company appointed a qualified technical adviser to advise on the estimated time frame for obtaining a resource estimation and to prepare a technical report on the tungsten mines based on international reporting standards. Details of the time frame of production of the tungsten mines will be provided as soon as it is available.

Link to report

 

First Mongolian Share Distribution Entitlement determined

June 25 -- Directors of GoConnect Ltd ("GCN") are pleased to confirm that under GCN's partnership agreement with First Mongolian Investment Holdings Ltd ("First Mongolian"), 100 million First Mongolian fully paid ordinary shares will be distributed to qualifying GCN shareholders in proportion to their GCN shareholding for nil consideration ("Entitlement Shares"). Based on the issued capital of GCN as at the record date 22 June 2012, 525 GCN shareholders, holding in excess of 93% of the total issued capital of GCN have qualified. For these shareholders, each of their GCN share is entitled to 0.11495 First Mongolian Entitlement Share to be issued with a face value of 40 cents, thus providing a distribution face value for each GCN share of approximately 4.6 cents in First Mongolian share. In determining the final entitlement, shareholders should note that fractions have been disregarded. Investors need to be aware that First Mongolian shares may have a market value higher or lower than the face value. Only GCN shareholders who held 250,000 shares or more, and registered as shareholders by the books closing date of 22 June 2012, have qualified for the distribution. First Mongolian has planned to seek listing for its shares on the ASX. Preparation of a prospectus for the proposed ASX listing is well under way. Sino Investment Services Pty Ltd is the Lead Manager for the proposed listing. 

Qualified GCN shareholders will be advised of their First Mongolian Entitlement Share holdings by mail in the coming weeks. Further, GCN shareholders who have qualified for the First Mongolian Entitlement Shares will also each be offered a right to subscribe for an additional $2,000 of First Mongolian shares under the prospectus to be issued ("Subscription Shares"). The right to take up the Subscription Shares will be independent of the Entitlement Shares and qualified GCN shareholders will not be obligated to take up the Subscription Shares. 

Link to release

 

First Mongolian Media MobiNet strategic partnership on Wi-Fi media and IPTV

June 25 -- Directors of GoConnect Ltd ("GCN") are pleased to advise that First Mongolian Media Ltd ("FM Media"), incorporated in the BVI, has entered into a Memorandum of Understanding ("MOU") with MobiNet LLC ("MobiNet"), the largest broadband telecommunications company in Mongolia with in excess of 50 % market share of Mongolia's mobile phone subscribers. Mongolia has a population of 2.87 million people.

At approximately 64%, the current mobile phone penetration of Mongolia is still well below that of the Western world but is expected to reach 100% penetration within 3 years.

The telecommunications sector is expected to enjoy strong growth in line with projection that Mongolia is expected to experience an astonishing 20% GDP growth this year, further solidifying its undisputable position as the world's fastest growing economy in 2012. 

FM Media is a subsidiary of GCN, owned as to 51% by GCN and 49% by First Mongolian Investment Holdings Ltd, which owns an IPTV network with distribution including the web on www.uctv.fm, smartphones on m.uctv.fm, and major brands of Internet connected TVs. GCN has entered into global distribution agreements to distribute its IPTV content on the uctv.fm channel via connected TVs of Sony BRAVIA Internet Video Service, and LG Smart TV. GCN has also entered into advertising representation agreement with Netbay Internet which is the operator of a number of WiFi hotspots in Australia including hotspots operated under agreement with Metro Trains Melbourne, the operator of Victoria's Train Network ("Metro Netbay Free Wi-Fi").

GCN is the provider of online advertising delivery technology to Netbay Internet for the establishment of the Metro Netbay Free Wi-Fi service and acts as its media sales agent.

MobiNet is a wholly owned subsidiary of MobiCom Corporation. MobiNet has 10 years history of providing innovative internet and IT products and services to household, businesses and SMEs, government and large corporate enterprises. MobiNet is one of the leading IT solution providers and has the widest IP infrastructure in Mongolia. MobiNet has established close working relationship with major mining companies around Mongolia.

It is the aim of FM Media and MobiNet ("Parties") to establish an equal strategic partnership ("Partnership") to introduce free Wi-Fi media and IPTV services to the whole of Mongolia. The free Wi-Fi media and IPTV services will be compatible with MobiNet's existing fixed internet services and can be expected to create a significant new online media platform and media revenue stream which will be shared by the Parties.

The Parties will promote the free Wi-Fi media and IPTV services on each Party's respective online and offline properties. MobiNet through MobiCom, has over 12,000 retail outlets throughout Mongolia which can provide significant Wi-Fi media coverage for the whole of Mongolia.  MobiNet has over 1.3 million mobile subscribers with currently over 11% of that using smartphones, though the smartphone user population is expected to grow significantly in coming months. These smartphone users will be the first to benefit from the Partnership's IPTV and free Wi-Fi media services. 

FM Media will provide its technologies and knowhow, under licence from GCN, in order to establish advertising funded free Wi-Fi media and IPTV services for the Partnership.

FM Media will provide IPTV content to the Partnership and will contribute to project management for the implementation of the IPTV service. FM Media will assist the Partnership in delivering IPTV through internet connected TVs. MobiNet may provide Mongolian language content to the Partnership's IPTV service. MobiNet will actively promote the Partnership's free Wi-Fi media and IPTV services to its existing customer base.

Over the next 6 months, the Parties will work towards reaching the final agreement and to implement the Free Wi-Fi media and IPTV services throughout Mongolia.

Link to release

 

MSE: WEEKLY REVIEW FOR JUNE 18-22, 2012

June 25 (InfoMongolia.com) In the week of June 18-22, 2012, Mongolian Stock Exchange (MSE) has held 5 trading sessions, through which a total of 2.1 million shares of 56 JSC's worth 7.3 billion MNT were traded.

The Top 20 index reached at 19,164.80 points, compared with the previous week showed an increase of 317.81 points or 1.7 percent. This was due to increase of Aduunchuluun (59.8%), Baganuur (26.1%), Shivee Ovoo (16.6%), Mogoin Gol (12.5%), Mongolia Development Resources (5.2%), Sharyn Gol (5.0%), Tavan Tolgoi (3.1%), Remicon (1.6%) and Mongol Shiltgeen (1.1%) shares, which were included in the index basket.

The total market capitalization increased by 57.9 billion MNT or 3.2 % percent and stood at 1 trillion and 835.6 billion MNT. The most stocks prices rose were Aduunchuluun (59.8%), Darkhan Guril Tejeel (51.8%), and Khuduu Teever (31.4%). The most stocks prices fell were Berkh Uul (18.6%), Sav Shim (15.0%) and Bayan Tooroi (15.0%).

Out of 56 stocks that were traded 30 stocks' prices rose, 17 stocks' prices fell and 9 were unchanged.

The most actively traded stocks by number of shares traded were Shivee Ovoo (946.9 thousand shares), E-Trans Logistics (455.9 thousand shares) and Naco Fuel (350.0 thousand shares).

The most actively traded stocks by value of trading were Shivee Ovoo (6.7 billion MNT), Erdenet Khuns (142.7 million MNT) and APU (90.3 million MNT).

Link to article

 

World Bank: Mongolia Quarterly Economic Update - June 2012

June 25 (World Bank)

Key Findings

Overall

·         The Mongolian economy is continuing to grow at a very rapid pace, expanding by 16.7 percent year-on-year (yoy) in Q1

·         This high growth however, is also fuelling inflation which touched 16 percent in April, well above the Bank of Mongolia's (BoM) inflation target of 10 percent. 

·         Increasing government spending on wages and salaries, large cash handouts to the general population, and burgeoning capital expenditures are adding to the demand pressures. 

·         Meanwhile, the worsening global economic outlook, in particular a faster than expected slowdown in China, Mongolia's largest trading partner, has negatively impacted export growth, resulting in deterioration in external balances. 

·         Under these circumstances, the advice to Mongolian policy-makers is to "hold your horses" and adopt a more cautious macro-economic stance, tightening both monetary and fiscal policy to prevent further over-heating of the economy.

Real sector developments

·         Growth is being led by the service sectors, in particular wholesale and retail trade which expanded by 51 percent yoy in Q1, following an outturn of 70.5 percent in the last quarter of 2011, and transport which grew by 11.7 percent yoy. 

·         The development of the Oyu Tolgoi mine is having strong spillovers into the rest of the economy, including through lifting consumer and business sentiment. 

·         The first quarter data also revealed that the agriculture sector is finally recovering from the effects of "dzud" (severe weather conditions) suffered in late 2009/early 2010, growing by 13.6 percent in Q1.

Fiscal developments

·         Government spending growth is outpacing revenue growth, resulting in an increasing fiscal deficit. Spending, in nominal terms, was 32 percent yoy higher in April (year to date, YTD, basis) with capital spending growing by more than 100 percent. 

·         Revenues are failing to grow at the same pace, rising only 21 percent in nominal terms on a YTD basis in April, as a result of weaker growth in receipts from taxes on international trade, and negative growth in excise taxes, royalties and dividends from mining sector companies. 

·         As a result, the fiscal deficit has climbed considerably, reaching 4.7 percent of GDP in March, its highest level in nearly two years.

Inflation and Banking Sector

·         Inflation is being pushed up by rising core inflation, which reflects demand side pressures from higher government spending, and by rising food prices, notably of meat. 

·         Recent rate hikes by the BoM are helping to reduce the pace of bank lending, which had been growing over 60 percent at the start of the year. Although there is room to hike further, with the interest rates on central bank paper still negative in real terms, monetary tightening needs to be complemented by fiscal restraint in order to be effective.

External sector

·         Exports contracted by 2.8 percent yoy in April. This was the first fall in more than two years, and reflected weaker global economic conditions, sliding commodity prices and slowing growth in China which is Mongolia's largest trading partner. 

·         Coal, which is the largest export earner, is barely growing, while copper exports have been performing poorly for some time now. 

·         On a four-quarter rolling sum basis, the current account deficit widened to 35 percent of GDP in Q1 2012 from 18 percent in Q1 2011 but was financed by the record levels of FDI(Foreign Direct Investment) inflows of US$ 4.4 bn or roughly half of GDP, and Foreign Currency reserves remain high. 

·         The Togrog (Mongolian currency) has appreciated in recent months, in both nominal and in real terms which will undermine the competitiveness of Mongolia's non-mineral traded sector.

Poverty

·         Recent poverty analysis, conducted jointly by the World Bank and the National Statistics Office of Mongolia, finds that the national poverty headcount rate declined from 39.2 percent in 2010 to 29.8 percent in 2011. This progress took place against the backdrop of strong economic growth, sizeable social transfers, and large investments to help the recovery from the 2010 dzud. 

·         However, the recent acceleration in inflation is worrying since it will impact the poor disproportionally, and rising food inflation is particularly worrying since food constitutes 49 percent of expenditures among households in the lowest quintile of the income distribution.

Economic outlook

·         The global economic outlook has deteriorated considerably in recent months. Financial conditions in high-income Europe, higher oil prices, and, most importantly, the slowing Chinese economy pose risks for Mongolia. 

·         Given these risks, Mongolian policy-makers need to adopt a cautious macro-economic stance. This will entail limiting the build-up of vulnerabilities in the banking sector, reining in the growth of government expenditures, minimizing off-budget financing activities and ensuring that the lending of the Development Bank of Mongolia is within the framework of the Fiscal Stability Law. 

·         Adjusting the policy stance in this manner will address the internal imbalances that are already evident as well as position Mongolia better to deal with the risks to the regional and global economy. 

·         It will also ensure that the money spent is well spent, namely on activities that help to build the public and human capital infrastructure of Mongolia and maximize the returns of the country's mineral wealth to its people.

Link to report page

 

BoM Board of Directors Keeps Policy Rate Unchanged at 13.25%

June 22 (Bank of Mongolia) At the Monetary Policy Meeting held on June 21, 2012, the BoM Board of Directors decided to remain the policy rate at 13.25 percent.

Link to release

 

BoM issues 10B 12-week 15.8% bills

June 25 (Bank of Mongolia) BoM issues 12 week bills worth MNT 10 billion at a weighted interest rate of 15.8 percent per annum. /For previous auctions click here/

Link to release

 

EVERY CITIZEN TO OWN PREFERRED STOCK OF ERDENES MGL COMPANY

Ulaanbaatar, Mongolia, June 26 /MONTSAME/ At a regular meeting, the cabinet made decision on granting to every citizen a preference stock of the Erdenes MGL Company. Before this decision, the cabinet has decided to hand 1,072 units stocks of the Erdenes Tavantolgoi LLC to citizens.

The Erdenes MGL Company possesses two associated companies--the Erdenes TT and the Oyutolgoi that own three special licenses of the strategically-important "Shivee-Ovoo" brown coal deposit. In accordance with the above decision, citizens are enabled to have dividends from the strategic mineral deposits.

Owner of the preference stock of the Erdenes MGL has a special right to have the dividend prior to the government and the shareholders. "This is an expression of the cabinet to realize its policy of equally distribute benefits of the natural resources to every person," the Prime Minister S.Batbold stressed.

The Erdenes MGL Company owns 100 thousand units of common stock and 3 million units of preference stock. Thus, it is possible to distribute the stock to every person who is listed in the state registration.

In accordance with the related law, the preference stock owner shall not sell the preference stock or present it to others. It is also illegal for the owner to inherit it to someone or to pawn it for something.

Link to article

 

Sainshand Industrial Complex Plan Approved

June 26 (news.mn) The Government of Mongolia held an irregular meeting on Monday, on June 25 and approved a master plan of Sainshand Industrial Complex.

The government decided to establish state owned company "Sainshand" to manage approved plan. To establish Sainshand Industrial Complex needed $9.3 billion. Required money to construct industrial complex will be settled in local and state budget.

A master plan of Sainshand Industrial Complex has 12 part. A plan considering to establish few factories such as copper melting, coking coal melting and cement producing. The Sainshand Industrial complex should produce 12 million tone raw material and 7 million tone processing product.

In total 2400 new jobs will be created in the Sainshand and will be set up new town with 21 tousand residents.

Link to article

 

New town to be established in Khoshigt Valley for new airport

June 26 (news.mn) The Cabinet meeting of June 25 discuss issue related to the new international airport in Khoshigt Valley in Tuv province. Construction work of airport is going on. The government planned to finish construction work by 2015.

The new airport with capacity to serve 1 million 650 thousand passengers a year and receive 6 airplane same time. To ensure normal environment for airport staff need to establish new town with 100 thousand resident.

Link to article

 

BORSHOO TO BECOME A LARGE PORT CONNECTING RUSSIA-MONGOLIA-CHINA

June 22 (InfoMongolia.com) The regular meeting of the Customs Offices of Mongolia and Siberia was held in Tuva, the Russian Federation, on June 21, 2012. The Consulate General from Mongolia to Kyzyl D.Bazarsad, the Head of the Emergency Control and Diagnostics Department of the General Customs Office Ts.Gendentseveen and the heads of customs offices of Selenge, Khuvsgul, Uvs and Zavkhan aimags participated in the meeting on behalf of Mongolia, where the Russian side was represented by the Deputy Head of the Siberian Customs Directorate, Sergey Pankratov and heads of customs directorates of Tuva Republic, Altai Krai and the Republic of Buryatia.

The two sides discussed about the 2010-2011 regional foreign trade summary and talked about the ways of developing relations and cooperation, and the function of customs organizations in this process. The Mongolian side noted that trade with Russia, especially with the Siberian region, is stable regardless of world economic crisis. Out of the total trade turnover with the Siberian region, Kemerovo, Irkutsk and Buryatia make up for 30%. Although trade is stable, the sides agreed upon the opportunity to increase trade turnover. The prompt operation of customs organizations is of significance in accomplishing this.

Thus, the sides have negotiated to cooperate on providing border points with advanced technology and exchanging information.

During the meeting, much attention was directed towards the Borshoo-Khandgait port issue at the Mongolia-Tuva border. The Head of the Tuvan Customs Office Vyacheslav Valkov said, "If the amount of commodities crossing through this port increases, we are planning to reflect the restoration of the port into the state budget of the Russian Federation", in return to which the Mongolian side noted that works are underway to make the Borshoo port of international status by increasing the daily capacity up to 250 vehicles. Currently, Borshoo port is connected to Ulaangom city with an automobile highway, where other highway is being built to connect Ulaangom, Uvs aimag to the border of the People's Republic of China. With the opening of this new highway, Borshoo port could become a large port that connects Russia-Mongolia-China. The next customs meeting of Mongolia and Russia will be organized in Mongolia, where the date is to be announced soon. The Head of the Uvs aimag customs office Ch.Erdenebaatar handed an invitation for the 100th anniversary of establishment of the Mongolian customs organization to the Russian delegations, which is to be held next month in Uvs aimag.

Link to article

 

Custodians set up camp in Mongolia

Custodians are responding to investors' interest in uncharted markets by developing an on-the-ground custody presence. Sometimes, as in the case of Mongolia, that means starting from scratch.

June 25 (Financial News) Mongolia, which has huge mineral deposits and a booming commodities sector, is a particular focus for investors and custodians.

The country has experienced significant growth in gross domestic product, from 6.4% in 2010 to 17.3% last year, according to the World Bank, which expects the country's GDP to increase by 15% this year.

Custodians agree that Mongolia is one of the top picks for their clients. But finding a way to keep their clients' Mongolian assets safe is less obvious.

In most markets outside their home base, custodians rely on sub-custodians to help them access the local market infrastructure such as central securities depositories, and to aid settlement processes.
However, Mongolia is a special case: custody does not exist there.

Beatriz Molina, head of global network management at BNY Mellon, the world's largest custodian with $26.6 trillion in assets under custody, said: "In Mongolia, there is really no custody concept per se – the custodian role is not recognised."

So there are no local custodians. And although it has a stock exchange, established in 1991, it has no interbank messaging network such as Swift, which automates the payment and settlement messaging process.

Nor does it possess a "delivery versus payment" mechanism to ensure securities and payment are traded simultaneously. Counterparty risk is, therefore, a concern, and the onus could fall on the custodian to provide an indemnification.

In February, BNP Paribas Securities Services became the first global custodian to take up the challenge. It set up a bespoke custody offering for Harvest Global Investments, China's second-largest asset manager with $37bn in assets under management.

BNP Paribas was able to use the fact that foreign investors might hold accounts directly, in their own name, at the local CSD, and that a third party might use those accounts on their behalf.

Finding a way

Lawrence Au, head of Asia-Pacific at BNP Paribas Securities Services, said: "We would go into that account and make sure the securities are delivered before we instruct the nostro bank in Mongolia to move the cash to the brokers.

So, in a way, we have created a manual or improvised arrangement for delivery versus payment."

The regulators in Mongolia are working to remove the barriers to entry for foreign investors, adapting their regulations and asking global custodians for advice. BNP Paribas Securities Services is involved in the working group, advising on aligning the market's settlement system with international processes. 

JP Morgan has also become involved.

Elizabeth Fortier, managing director, network management at JP Morgan Worldwide Securities Services, said her company had recently reviewed the regulatory amendments and provided commentary, "with a view toward helping expedite the process".

John Mason, business development manager for global custodian State Street in South Asia, said: "We are currently reviewing the infrastructure and the environment of the [Mongolian] market to determine the feasibility of offering access, but we don't see any viable direct custody providers that can meet our requirements yet."

But others say investors often become less interested when they hear about the work Mongolia requires.

One custodian, who asked not to be named, said he doubted a BNP Paribas-type Mongolian set-up could be applied to just any type of investor. He said: "If clients are asking us to open in Mongolia, once we explain the potential set-up to them and that custody is not recognised, it is possible that the client is not interested in that model either."

He said when talking to investors about new markets, the custodian looks at a series of criteria, including whether there is a concept of enforceable asset protection, a stock exchange, clearing houses and tax structures. "Most importantly, whether there are capable sub-custodians. If I get a 'no' in one of the criteria, I have to tell investors we cannot help."

Back of beyond

Nevertheless, custodians must consider new markets where clients may want to invest. Molina said it was looking at Tanzania, where a custody chain exists.

State Street's Mason said although there was interest in frontier markets, they had not been immune to investor sentiment. "In the last year, we have seen a pullback from clients in markets where there was once growth."

However, he said opportunities still existed and Panama was its next possible sub-custody expansion. The custodian used to offer custody in the market through HSBC, which, in 2009, discontinued its services there.

A challenge does not deter custodians. Mason said: "In Albania, the infrastructure is challenging, but we have identified a potential sub-custody provider and are reviewing its capabilities. Macedonia and Montenegro are also markets where we are looking to set up sub-custody relationships."

Malawi is another country where investors are showing interest, but custodians are struggling. Mason said: "Challenges include pre-funding of local brokers, cash accounts, settlement and lack of liquidity.

Malawi has a 10% limit on foreign individuals' investment in a stock and 49% aggregate limits. So it may not just be the technical infrastructure is not in place, it may be that the capital markets regulation restricts our activities."

Link to article

 

THE ELECTION ONGOING PROCESS WILL BE REPORTED AT 11:00 AM, 04:00 PM AND 08:00 PM RESPECTIVELY

June 25 (InfoMongolia.com) The preparatory work for the automatization of the upcoming election is at the normal pace neatly following the schedule, said officials.

The programization of ballot counting machines has been conducted and the acceptance certificates have been attached to the machines, thus the General Election Commission of Mongolia delivered the counting machines to the subcommittees of the 26 electoral districts across the nation respectively.

Also, the General Election Commission has finished publishing the ballots and delivered them to all electoral subcommittees accordingly. Today on June 25, 2012, the Commission is to call a meeting with the Heads of the electoral subcommittees of each district regarding a progress of the election preparation actions and its relevant conditions, the meeting will be transmitted live through the national radio station nationwide.

On the Election Day on June 28, the polling will start at 07:00 am and finish at 08:00 pm. The voters' attendance will be summarized and reported to public at 11:00 am, 04:00 pm and 08:00 pm respectively. This report would include number of the total eligible voters listed in the particular election subcommittee of the particular electoral district, number of voters attended the election as of the report time and its complying percentages, informed Press and Media of the General Election Commission of Mongolia on June 25, 2012.

Link to article

 

MONGOLIA BRACES FOR CHANGE

ULAN BATOR, June 26 (South China Morning Post) – It's 7.30am and Chuluun Ganhuyag is standing in Sukhbaatar Square, limbering up in a tight-fitting black Adidas tracksuit. A group of supporters surround him, stretching and bending over to touch their toes, each of them wearing a T-shirt with an image of Ganhuyag's stubbly pate printed on the back.

The early morning jog across the potholed streets of Ulan Bator is part physical fitness and part campaign tactic as the 39-year-old pursues membership in Mongolia's 76-seat parliament, called the Great Hural.

Sporting a crew cut and boyish looks, Ganhuyag is the fresh face of the Mongolian People's Party (MPP), the ruling force in Mongolia's political establishment and the one that is facing the greatest pressure as the country holds general elections on Thursday.

"In order to stay fit during the campaign, I initiated this jogging group to run every morning. I think it energises and inspires young people to do sports and get involved with city life," said Ganhuyag, before dashing across Sukhbaatar Square, which is named after the hero of Mongolia's 1921 communist revolution.

MPP, Mongolia's oldest political party, was known as the Mongolian People's Revolutionary Party (MPRP) until 2010, when it reverted to the name by which it had been known since 1924, three years after it was formed in 1921. But after an internal split, the MPRP name was adopted by a breakaway faction now led by former president Nambar Enkhbayar. MPRP currently portrays itself as a protest party for voters fed up with the establishment.

Locked in a fierce battle for votes with the opposition Democratic Party (DP), MPP is trailing the Democrats by 14 points in the latest opinion polls. According to a survey conducted by the Sant Maral Foundation, 42 per cent of voters support the DP, while just 28 per cent favour MPP.

These figures are in stark contrast to Sant Maral's April poll, which showed both parties, the two biggest, running neck and neck.

To be sure, MPP is not trailing in the polls for lack of effort. Ganhuyag and his fellow parliamentary candidates are all over the city and across Mongolia – their billboards loom over every street corner. Their advertisements appear on television screens in cities and villages. And on the internet, there is a full-fledged campaign battle being waged on Facebook, Twitter and YouTube.

"For me it's a social media election," said Ganhuyag, speaking in a cafe after his jog. "I interact with voters through my tweets and blogs and I have a podcast that describes my ideas and platform."

His other means of campaigning is old-school flesh-pressing. He boards buses and greets voters, he holds rallies on street corners and he waves to passers-by as he jogs, perhaps surprising a few Mongolians who are used to seeing politicians drive around town in Hummers and Land Cruisers with tinted windows.

Ganhuyag's MPP, the ruling party during Mongolia's seven-decade experiment with communism, brands itself as a centre-left party that focuses on social welfare supported by higher taxes. In contrast, the DP is a centre-right party that favours low taxes and support for light industry and private business.

While Ganhuyag dashes about town, the DP campaign is equally vigorous. It broadcasts short television programmes that depict negative aspects of Mongolian life, and then promises that life will improve under its leadership. Some election watchers say DP's message has resonated more strongly among voters than MPP's.

"People see the Democrats as hip and eager to change the system, while the MPP is viewed as older guys that are out of touch with the values and interests of ordinary voters," said Dale Choi, chief strategic officer at Ulan Bator-based Frontier Securities. "The Democrats talk about cleaning up government from inside out, while MPP wants to stay on the same track they've been on for years."

While the Democrats push for change, the MPP argues that its recent four-year rule has been good for Mongolia.

Indeed, Mongolia's economy has grown strongly. Gross domestic product rose 17 per cent last year and is expected to reach 19 per cent next year. And over the past four years, the national average monthly salary has doubled from 250,000 tugrik (HK$1,450) to 500,000 tugrik.

The mining sector has been a major growth driver, boosting foreign direct investment by roughly 400 per cent last year to a record US$5 billion.

However, the DP argues that only the wealthy elites are gaining from the economic boom, while most Mongolians struggle with rising inflation, inadequate infrastructure and high unemployment.

Tsedevdamba Oyungerel, a DP candidate seeking to represent Ulan Bator's Khan-Uul district, thinks the political campaign is more about social issues and less about flashy adverts and posters. At a weekend rally in Khan-Uul, an area known for its sprawling factories and tangle of roads through crumbling tenement blocks, Oyungerel heard repeatedly from voters that land rights are their biggest concern.

"Everyone I meet wants to talk about how they can get their land," said Oyungerel, referring to a decade-old plan to distribute a plot of land to every citizen. "It's an issue that is close to their hearts and MPP is not talking about this."

The Stanford-educated Oyungerel, a former adviser to the Mongolian president, accuses the government of ignoring the needs of marginalised poor families.

"In many of the outer 'ger' districts people live in total darkness, there are no roads, no water, no electricity. The MPP has been in power for more than 10 years and have done nothing in these areas. They pretend these places do not exist," she said.

While the DP and MPP duke it out on the campaign trail, the MPRP has been rising in the polls.

Under former president Nambar Enkhbayar's leadership, the MPRP and its coalition partner, the Mongolian National Democratic Party (MNDP), won 24 per cent of the votes cast in the latest Sant Maral poll. This is significantly higher than the 12 per cent of votes that the MPRP-MNDP coalition secured in the April poll.

In an ironic twist of fate, Enkhbayar himself is barred from running for office due to a ruling by the General Election Committee, which declared him unfit to run because he did not meet a requirement that candidates "display proper education, experience and commitment to the state".

In April Enkhbayar was arrested and charged with five counts of corruption that investigators say occurred during his terms as president (June 2005 to June 2009) and as prime minister (July 2000 to August 2004). In a dawn raid, plainclothes officers broke into his home, dragged him outside with his feet still bare and bundled him into a van.

The arrest shocked many Mongolians, who felt the case was politically motivated to keep Enkhbayar out of politics. But rather than damaging Enkhbayar's reputation, the incident seems to have galvanised a segment of the population and boosted his popularity. Most of his support has been drained from the MPP, a party he once led.

"The MPP is campaigning very effectively on behalf of Enkhbayar," said Luvsandendev Sumati, Sant Maral's head, with a hint of sarcasm.

"The way they are handling Enkhbayar's case creates an opinion among certain parts of society that they are oppressed and they require some support."

The rise of a third political force is indicative of festering voter dissatisfaction about government and politicians, often perceived as corrupt and self-serving. When Sant Maral asked voters if lawmakers remain the true representatives of the people, 89 per cent said "no". And when asked if the wealth gap is too wide and could result in civil unrest, a similar percentage of voters said "yes".

That was precisely what occurred after the 2008 election, which descended into violence after Tsakhia Elbegdorj, DP's leader at that time and the current president, accused MPP of rigging the vote. Elbegdorj had led a mob to MPP's headquarters and the protest spiralled out of control, leaving five people dead and the MPP building gutted by fire.

For Thursday's elections, few people expect such violence, but as Mongolians prepare to vote there is a sense of urgency about who should lead the country into a potentially bright future. Whichever party is voted into power will be at the helm of a putative emerging Asian powerhouse. It will have huge expectations to fulfil, as voters have been promised their fair slice of the economic pie.

"Both parties have similar goals but want to take different roads in getting there," said pensioner Gombosuren Duger. "My vote is for the MPP, but no matter who wins I just hope our politicians could distribute our wealth fairly. Mongolia is rich and we should all benefit."

Link to article

 

Mongolia gets ready for parliamentary election

ULAN BATOR, June 25 (Xinhua) -- The General Election Committee (GEC) of Mongolia on Monday informed foreign diplomatic missions based in Ulan Bator and domestic and overseas media of the preparation work for the parliamentary election on June 28.

GEC President N.Luvsanjav said Mongolia has got ready for the fifth Mongolian State Great Khural (parliament) election and the election will be conducted on June 28.

A total of 544 candidates from 11 parties and 2 party coalitions including the ruling Mongolian People's Party, the main opposition party Democratic Party of Mongolia as well as the coalition formed by Mongolian People's Revolutionary Party led by former president Nambar Enkhbayar and Mongolian National Democratic Party will run for the 76 parliament seats.

There are over 1.83 million registered voters in this election and they will cast their ballots in 1,905 polling stations nationwide.

A total of 30 international observers from 9 international organizations will supervise the voting process and over 30 foreign journalists will report the election.

For the first time, Mongolia will use electric counting machines for votes counting in this election.

The Mongolian State Great Khural (parliament) is the supreme body of state power and owns the legislative power. Every four years, Mongolia holds a parliamentary election to elect a new parliament.

Link to article

 

A Crucial Week In Mongolia

By Doug Schoen, Contributor

June 25 (Forbes) It appears that President Elbegdorj has gotten his way and former President Enkhbayar will not be able to stand in the parliamentary elections this coming Thursday. (Mogi: "gotten his way" is a little harsh when the ruling MPP is also not opposing the ruling)

Enkhbayar's appeal to the Constitutional Court will not be heard until tomorrow, a mere two days before the election. At that point, the Constitutional Court will decide whether or not to even accept and review his petition. With the way things have been handled thus far, Enkhbayar will not be a candidate for his Mongolian People's Revolutionary Party

One would think that corrupting the democratic process to this point would be enough, but the current Mongolian government has gone even further. The Sukhhbaatar District Court has ruled that Enkhbayar cannot leave the city until his trial thereby preventing him from campaigning for his party in the countryside, Elbegdorj's homeland. (Mogi: this author is asking the court to break the law it seems)

Before the ruling, Enkhbayar had been traveling to the countryside regularly and making excellent progress for his party. Warmly received everywhere that he campaigned he is now penned into campaigning within the city and, once again, prevented from truly challenging Elbegdorj. 

Enkhbayar continues to be ranked amongst the top politicians in Mongolia. A recent poll by Sant Maral asked "Who is a politician you want to see more involved within the government and making changes?" as well as "Who is in your opinion a top politician in this country?" Enkhbayar was the number one choice to both these questions. 

The people of Mongolia have been stripped of their democratic right to choose Enkhbayar at the upcoming elections. They are now being stripped of their right to hear from him on behalf of his party. (Mogi: the people still have the right to vote for MPRP, he still can campaign from within UB, the author forgets he is on bail and can't skip town)

Those of us in the West know how important it is for party leaders to campaign. The results of these polls indicate that Enkhbayar is, indeed, a true threat to Elbegdorj's reelection bid and make it all the more clear that Elbegdorj is doing everything in his power to ensure that Enkhbayar remains off the political scene until the election is over. (Mogi: those of us in "Mongolia" also know how important it is for party leaders to campaign, which I'll remind he still can from UB)

There can never be free and fair elections without everyone – particularly leading politicians – competing without restrictions or harassment. (Mogi: even if that politician is accused of corruption, however controversial it may be?)

Time is running out for the international community to act. We must face the grim reality that Enkhbayar will not be standing in the election, but must continue to push for him anyway. Anything less would be giving in to a corrupt and truly undemocratic government in Mongolia. (Mogi: Huh? Time running out to act? Oh boy!)

Link to article

 

Impressions for the DP Rally in Yarmag

June 25 (Brandon Miliate, University of BC) Julian and I have just returned from the Democratic Party Rally in Yarmag, Han-Uul District where the party's two Parliamentary candidates L. Bold and Ts. Oyungerel as well as E. Bat-Uul, running for UB Parliament, made speeches in support of the party and their campaigns. The rally provided interesting insights into the last couple days of campaigning.

My general sense was that even after 20 years on the Mongolian political scene, the DP still uses its status as the "new guys in town" to draw distinctions between itself and the MPP. They still seem to see themselves as the new and distinctly modern party. Directly related to this "newness" was reference to the DP as corruption-free, fighting for a corruption-free Ulaanbaatar and country. Also tied to this so-called modernity is the clear reference to Western-style democracies, namely the United States of America. During the introductions of Bold and Oyungerel, the announcer made particular mention of their US education as a sign of their legitimacy to lead. Furthermore, L. Bold himself made a bold statement by telling the audience that Mongolia had two choices in this important intersection in its political and economic development: 1) the Chinese path; 2) the American path. This was in reference not only to the country's economic development model, but also to human rights and liberty. The DP is promising a "Mongolian Dream" (paralleling the "American Dream") whereby the people have the ability to achieve their wants, needs, and aspirations. The central DP central slogan comes to life when the speakers proclaimed that Mongolians want to "live like a (real) person and develop like a (real) country" (Хүн шиг амьдрмаар байна, Улс шиг хөгжимөөр байна!). The people's thoughts and ideas are the party's thoughts/ideas, and their dreams are the DP's dreams, or so we were told.

Surprisingly, both the rally and the general meet-and-greet that preceded it brought up a topic that I not previously considered a pressing political issue: land rights. This surprisingly hot-button issue may mark a key distinction between the MPP and DP. The MPP seems to be more interested in working as quickly as possible to re-organize and in some cases replace the ger districts as well the quickly developing regions near Zaisan Monument (Зайсан Цогцолбор). The DP is running on a platform of protecting individual land rights and even extending rights to ger district citizens so as to allow a market driven resolution that benefits as many people as possible without the state forcing anyone's hand. Admittedly, this is not an issue that I have any experience in, and I did not expect this issue to come up since it has not made it into any of the elections materials that I have seen. Clearly, it is an area for further thought, and perhaps further blog posts.

The proceedings of the rally where rather standard, with the obligatory cheers and whistling, politicians followed by such cultural icons as actor Amaraa and a rather amusing character in a bright orange deel. Held near the airport, both Julian Dierkes and myself where delighted by the clean air full of the uniquely characteristic smell of the Mongolian countryside. The rally was attended by approximately 500 people, presumably mostly from the ger district across the street. Interestingly enough, the event included a parachuter and concluded with a full on fireworks show. These seemed rather poorly planned and distracted from the candidates themselves, but the crowd seemed to enjoy it anyways. All in all, a seemingly successful rally that proved very informative on DP strategy.

Link to blog

 

Update on Election Expectations

June 25 (Julian Dierkes, University of BC) 10 days ago before I arrived in Mongolia, I wrote about some of the things I was keeping an eye on in the election. One of the issues I am paying attention to is whether corruption has become more of a topic for public discussions, rather than a subject of conspiracy theories and widely shared assumptions.

The short answer from the past two days of chasing after campaign events and visiting campaign offices is: no, corruption has not become a major topic for voters' attention.

The message on this has been clearest at the local level. Corruption – as an issue of election-related political concern – is clearly trumped by "more immediate" livelihood concerns like property rights, pollution, and unemployment.

One of the aspects of the current election that is new is that it is being held concurrently with the Ulaanbaatar city council elections. In this election, there are 45 seats up for grabs, 30 through a first-past-the-post election in ridings, 15 through proportional representation akin to the party lists for the national election.

My understanding is that the six national ridings for Ulaanbaatar are subdivided five times each to yield 30 city-wide ridings.

The mayor is a member of and elected by the city council. Currently, this is Munkhbayar of the MPP. On the DP side, Bat-Uul, long-time democracy activist and DP leader, is the most prominent candidate.

We've visited a small number of city election campaign managers and election offices that form the basis for my impressions here.

In all of these visits, corruption was not mentioned as a top concern for voters. City election candidates obviously have much more direct contact with (potential) voters than candidates running for parliament and were thus a good source for answers about questions regarding the issues raised by voters.

Concrete and often very local topics clearly dominate these discussions and corruption only comes up in this context in regards to very specific issues, especially land rights. This is true even for the Civil Will – Green Party which might have stood to gain the most from a public focus on corruption as I had speculated previously. CWGP officials emphasize that anti-corruption was still an important or even central part of their agenda, but that this did not resonate with voters who are overwhelmingly concerned with seemingly more immediate issues.

Basic urban infrastructure, sewage, drinking water, electricity, were mentioned frequently as was garbage pick-up, the high number of stray dogs, and similar, quasi-environmental concerns.

At the national  level, by contrast, corruption is mentioned as an issue, especially by the DP that continues to portray itself as representing politics of a different, including a non-corrupt kind.

Implications

If corruption does not emerge as a major issue and factor in this election, what does that mean? It reduces my expectations for success of the Civil Will – Green Party significantly. Some interlocutors here in Ulaanbaatar have expressed a fear that CWGP might not clear the 5% hurdle in the proportional representation voting (which would suggest that the nearly universally admired Oyun would loose her seat), most likely suggesting that they would lose their presence in the Ikh Khural entirely. I still think that the party will make it into parliament, but probably with fewer seats than I might have initially expected.

By contrast a lack of a focus on corruption might boost the protest vote to the MPRP.

Link to blog

 

Mongolia's Political Ads, Part 1Khugjmiin Duureg, June 25

Mongolia's Political Ads, Part 2Khugjmiin Duureg, June 25

Mongolia's Political Ads, Part 3Khugjmiin Duureg, June 25

Mongolia's Political Ads, Part 4Khugjmiin Duureg, June 25

 

Market wary of Mongolia's poll

June 25 (The Australian) IN a best-case scenario, this week's election in Mongolia will remove the uncertainty that has hurt the share prices of Australian companies working in the frontier nation.

But the reality is likely to be more complicated than that.

The market's exotic love affair with all things Mongolian has come to an abrupt end this year, with the country's looming elections and an increased aversion to risk sparking a sell-off in the Australian companies exploring there.

It is a stark contrast to a year ago, when Australian exploration companies exploring in Mongolia were flying.

As more and more promising deposits were identified, excitement continued to grow about the potential riches that could be unlocked. Mongolia's position on the doorstep of a hungry China only added to the story's appeal.

Money was raised, deals were done, new Mongolia-focused ventures were floated on the ASX and share prices rose.

It is a different story today.

The streets of Mongolia's capital, Ulan Bator, continue to swarm with the frenetic activity of a city in the middle of a gold rush, due in part to the huge investment going into the Rio Tinto-controlled $13 billion Oyu Tolgoi copper-gold mine development in the Gobi Desert.

But the smaller exploration companies that had hitched themselves to the Mongolia story face a more uncertain future.

Investors have been increasingly scared off by a perceived rise in sovereign risk in Mongolia, with the looming election and its debate about how to spread the benefits of the resources sector to the people.

This represents a compelling reason to hold back from investing in the explorers and miners working in the country.

General concerns about the state of the global economy, an increased aversion towards risk among investors and a growing realisation about major infrastructure hurdles faced by companies hoping to develop mines in Mongolia have all helped drive down the prices of Mongolian stocks.

Shares in Perth-based Mongolian explorers Aspire Mining (ASX:AKM) and Modun Resources (ASX:MOU) are both down about 80 per cent from a year ago, and Sydney-based Xanadu Mines (ASX:XAM) is down about 65 per cent from its highs.

Mongolia-focused iron ore explorer Haranga Resources (ASX:HAR) is down 46 per cent since March.

All those companies and investors with a presence in Mongolia will be keeping a close eye on this week's election that pits the Mongolian People's Party against the Democratic Party, which was until recently its coalition partner.

The campaign has reflected a national debate about the role of mining in the country's economy.

The activity boom and the construction of Oyu Tolgoi have fed expectations of an economic windfall, but so far the riches generated have not filtered down to the rest of the population.

With an election on the horizon, there have been plenty of populist votes to be won through rhetoric that promises a greater slice of the mineral wealth for the people.

Recent calls for another rework of the investment agreement governing taxes and royalties from Oyu Tolgoi were swiftly put down by Rio, but the administration of the country's resources industry remains a topic of much discussion.

In Mongolia, the debate over resources is about more than just the hip pocket.

The influx of foreign mining companies into China has also sparked a debate about how much of the country's mineral riches should fall under the control of outside interests.

Chinese involvement in particular remains a sore point, which found its outlet when Chinese state-owned Chinalco bid for control of Hong Kong-listed Mongolian coalminer South Gobi Resources.

Chinalco's bid led to Mongolian authorities suspending South Gobi licences and prompted the country's parliament to introduce legislation forcing all major foreign investments to seek government approval.

Miners active in Mongolia point out that the legislation was watered down on its passage through the parliament and is little different from the process used by Australia's Foreign Investment Review Board.

But in a twitchy investment climate, the saga was seen as an example of the risks involved in investing in Mongolia.

In the shorter term, investors, companies and Mongolians will be hoping for a peaceful resolution to the election.

The campaign has been tight and the outcome is said to be too close to call.

The last legislative election, in 2008, was also tight and the result sparked violent protests and the declaration of a four-day state of emergency.

Those in the mining industry hope a tight result will lead to the two major parties forming a coalition government that would favour the status quo.

The election has taken on added potency since former president Nambaryn Enkhbayar was arrested on corruption charges and barred from participating in the election.

It adds up to a difficult and complex outlook for the country and the companies working there.

Even fund manager Templeton Emerging Markets executive chairman Mark Mobius appears to have gone shy on Mongolia.

Speaking in Hong Kong last week, Mobius said he believed the investment situation in Mongolia would remain "challenging", even after the election.

A lack of infrastructure and the evolution of its legislation would continue to hamper the country, he said. "The problem is they're not set up in their mindset to share these resources," he said.

"There's still a lot of debates about how much they want to allow foreigners to do. I'm not saying there's no good opportunities. I'm saying you need to be a little more cautious."

Miners and explorers on the ground in Mongolia say market dynamics are working against them.

But there's also a belief that, after the election, companies and the government will get back to maintaining the status quo.

"There's lack of interest from investors in the Australian market at the moment and that's affecting all of us," Xanadu Mines executive chairman Brian Thornton says.

Link to article

 

Mongolia's opposition takes lead ahead of polls

ULAN BATOR, June 23 (AFP) — Mongolia's opposition Democratic Party has established a strong lead over the ruling Mongolian People's Party (MPP) ahead of elections next week, according to an opinion poll released Friday.

The non-profit Sant Maral Foundation, which conducted the poll, said the MPP had been losing support to a breakaway party led by Mongolia's former president Nambar Enkhbayar.

The charismatic Enkhbayar, who is himself barred from standing in Thursday's parliamentary elections, is facing corruption charges that he says are politically motivated, and has condemned the ban.

The Sant Maral poll showed that 42 percent of Mongolians support the opposition Democratic Party, while just 28 percent said they would vote for the Mongolian People's Party.

A coalition of Enkhbayar's Mongolian People's Revolutionary Party (MPRP) and the Mongolian National Democratic Party (MNDP) is close behind with 24 percent -- double the support they achieved in an April opinion poll.

Luvsandendev Sumati, head of the Sant Maral Foundation, said many Mongolians believed the ruling party had mishandled Enkhbayar's case, costing it votes.

"The way they are handling Enkhbayar's case... creates an opinion among a certain part of society that they (the MPRP) are oppressed, and they require some support," he said.

"It's a disaster for the MPP that Enkhbayar is stealing their votes."

Landlocked Mongolia, wedged between China and Russia, peacefully shook off communist rule in 1990, and the first democratic elections were held in 1992.

The MPP -- Mongolia's oldest party -- has remained in control for most of that time, but the majority of its support comes from rural voters.

Link to article

 

Mogi: very factually incorrect article by LA Times

Political corruption case illustrates Mongolia's challenges

Former President Nambaryn Enkhbayar says the charges against him were engineered by the current president to keep him off the ballot in the upcoming election.

ULAN BATOR, Mongolia, June 24 (Los Angeles Times) — The man who was once the most powerful person in Mongolia lies in a hospital bed recovering from a hunger strike, the late afternoon sun falling across his sunken face. (Mogi: actually the former president is up and running, and campaigning for his party right now)

Mongolia's parliamentary elections are scheduled Thursday, but former President Nambaryn Enkhbayar will not be on the ballot. He is being tried on five counts of corruption, a case he charges was engineered by the current president.

"The present authorities are scared of me," he said in fluent English, his voice grave. "They control the judicial system and media. That's why they could launch this so-called anti-Enkhbayar campaign."

Enkhbayar's case, the most serious corruption scandal in Mongolia's recent history, illustrates some of the country's challenges as it seeks to establish itself as an example for other Central Asian nations. Its economy is growing rapidly as a result of a mining boom. But rampant corruption, political infighting and a still-incipient judicial system could hold it back.

Among other charges, Enkhbayar, who left office in 2009, is accused of pilfering $113,000 worth of television equipment intended for a Japanese Buddhist monastery. According to a separate charge, he allegedly dodged customs tariffs while shipping eight volumes of his autobiography to South Korea.

Amnesty International released a statement in May saying that his detention "appears to be arbitrary."

Sumati Luvsandendev, the director of Sant Maral, a polling organization in Ulan Bator, the capital, said that if new members of parliament did not address the country's most pressing issues — polluted rivers, extreme poverty, the rise of an oligarchic class — Enkhbayar's image as a victim could help him gather enough support to eventually regain power.

"He's a protest leader in this country," Sumati said, "which means that he definitely has public support, and it's not small."

If Enkhbayar's Mongolian People's Revolutionary Party wins enough seats in parliament, he could challenge his rival, current President Tsakhiagiin Elbegdorj, next year. Polls indicate that support for Enkhbayar's party has doubled since April.

Enkhbayar's arrest April 13 was broadcast live on national television. Hundreds of policemen surrounded the former president's house, carried him outside and threw him into the back of a van.

Enkhbayar's wife told Mongolian media that police made him walk alongside naked inmates and threatened to harm his 10-year-old daughter. (Mogi: this was proven to be false claim)

To protest the conditions of his detention, he refused to eat for 10 days. In mid-May, his family told media outlets that he had begun to suffer from organ failure. Because of his failing health and international pressure, authorities released him on bail.

Enkhbayar and his lawyers argue that the court gave them only a week to review the prosecution's evidence against him — 49 binders containing 150 documents each. They say that barring Enkhbayar from the elections before the court reaches a verdict violates his constitutional rights.

In a statement June 8, President Elbegdorj urged the international community to wait until the accusations were laid out in court before reaching a conclusion.

Although Enkhbayar's hunger strike initially elicited public sympathy, his support waned when a Mongolian television station broadcast images of him living in a five-room detention chamber and acting belligerently toward the hospital staff.

Few Mongolians doubt that political corruption is a serious issue. Critics of Enkhbayar say his case will send a message to other politicians that nobody is above the law.

"We don't want to set an example that if somebody's corrupt that they can get away with it," said Oyungerel Tsedevdamba, a candidate for parliament and former human rights advisor to Elbegdorj.

Others said the Enkhbayar case showed an increased reliance on the courts for matters that previously may have been resolved through violence. In 1998, the leader of Mongolia's democratic revolution, Sanjaasuren Zorig, was stabbed to death in front of his apartment. The killers were never found. (Mogi: he was found to be killed inside his apartment, not outside)

As Mongolians prepare to vote, many here are more concerned with unemployment or inflation. Even if they've been waiting for years for the government to make good on its promises, a number still express optimism.

"In Mongolia, they say that if you say negative things, they'll all come true," said Tserem Buted, 58, a retired seamstress. "Good things can come true, too. Maybe not for me, but at least for my children."

Link to article

 

PHOTO NEWS: THE TRIAL DATE OF N.ENKHBAYAR WAS SET AFTER THE NAADAM CELEBRATIONS

June 25 (InfoMongolia.com) The corruption case hearing of the former President and Head of the Mongolian People's Revolutionary Party (MPRP), N.Enkhbayar has been postponed three times before, due to weak health conditions (May 24), refusal from his lawyer (June 04), and absence of N.Enkhbayar's lawyer B.Oyunbileg (June 12) and delayed one time under the request to change his lawyer (June 19), where the fourth trial was delayed under his request to conduct the trial after 2012 Parliamentary Elections.

Thus, the Sukhbaatar District Court received his request to postpone the trial, where N.Enkhbayar has stated to fully familiarize with his case and not to postpone the trial again.

Although the Head of MPRP N.Enkhbayar, whose trial date has been determined to be held after Naadam celebrations, was eliminated from candidacy in the State Great Khural (Parliament) Elections by Proportional System, and he has visited Selenge, Darkhan-Uul, Bulgan, Orkhon, Arkhangai and Uvurkhangai aimags and met with the residents while supporting his fellow MPRP-MNDP (Mongolian National Democratic Party) "Justice" coalition candidates.

However, there is an index from the Sukhbaatar District Court that a person on bail within the criminal procedure law is not to leave the premises of the determined residency and has given N.Enkhbayar a warning not to leave Ulaanbaatar city. Thus, the former President of Mongolia has been working in support of "Justice" coalition candidates that are running in electoral districts of Ulaanbaatar city. N.Enkhbayar, who is in the spotlight for confinement, hunger strike and harsh political struggles, is appealing to vote for the "Justice" coalition candidates and is also introducing his "Five revolutions to safe Mongolia" Program. Besides, the gathered citizens were interested in the events that happened to N.Enkhbayar over the past month, including why he was arrested and confined, how he was treated at the retention center and at the hospital and his hunger-strike.

Link to article

Related:

Ex-president's court hearing scheduled on July 18news.mn, June 25

 

2012 Action Plan of All Political Parties: Economy Field

June 24 (UB Post) Only three days are left for Mongolians to vote in the 2012 Parliamentary Election.

The Parliamentary Election of 2012 is scheduled to be carried out on June 28th from 7 am to 8 pm. Due to the election, 11 political parties and two coalitions delivered related documents and action plans for the election to the General Election Commission. After submitting their certificates to run in the 2012 Parliamentary Election, political parties and coalitions have begun to market their election strategies.

In our previous four issues, the UB Post introduced our readers to the Action Plans of the political parties in the Labor and Social Welfare Field, the Health Field, Education, Culture and Science Field and Nature Environment and Ecology Field in brief.

Today the UB Post is introducing the 2012 Parliamentary Election Action Plans for Economy Field for the Mongolian People's Party, Democratic Party, Civil Will Green Party and the Justice Coalition merge of the Mongolian People's Revolutionary Party (MPRP) and Mongolian National Democratic Party (MNDP) in brief.

The Action Plans of the political parties are divided into parts such as Labor and Social Welfare, Health, Education Culture and Science, Nature Environment and Ecology, Economy and other departments which include foreign policy, defense policy so on.

Action Plan in the Economy Field:

MONGOLIAN PEOPLE'S PARTY

1. Increase the macro economy GDP per capita to USD 12000 by 2016. Pursue development oriented budget policy that maintains balance in the macro economy and increase the budget revenue.

2. Improve budget responsibility, finance vested development projects by budget investment and by domestic or foreign resources which are inexpensive, such as Development Bank loans etc.

3. Implement a taxation innovation policy and impose on SME's a one percent enterprise income tax and change the tax level by adjusting to its income and revenue.

4. Make VAT the imposition hallmark at 200 million MNT.

5. Annul the tax of national manufacturing commodities such as meat, flour, potato and vegetables. Support household manufacturing with taxation and loaning policy.

6. Increase the amount of loans from the state budget by 150 billion annually in order to support SME and household businesses and increase the circulation fund to the 1 trillion MNT.

7. Support domestic capital market by issuing long term bonds from the government.

Mineral resources and heavy industry

1. Develop the mineral resources sector by an organized policy with far vision and improve the legal environment.

2. Amend the law and official documents on mineral resources by a public poll and discussion. This includes:

      The Government will issue special licenses of mineral resources exploration.

      The exploration licenses will be issued upon the proposals and opinions of the local residents.

      Limit the number of licenses for a legal entity.

      Renew the hallmark standards, expand the list of strategic mines and ensure the Mongolian side owns 50 percent or more of the strategic mines.

      Impose tax on the income from the special license deals.

3. Make a package law on mineral resources adjusting to the national interests. Renovate the legal environment of mineral resources sector.

4. Increase the investment in mining exploration, and research and enrich the state minerals archive.

5. Introduce a world standard of management and a financial system to the operation of the enterprises that will use strategic mines.

6. Establish ore processing and exploiting plant at the Oyu Tolgoi mine. Build a pure copper factory that will process Erdenet and Oyu Tolgoi's copper concentrate.

7. Keep Tavan Tolgoi under the nation's ownership and implement a policy to distribute its benefits to Mongolians.

8. Support manufacturing of the domestic processing of iron ore and raw coal.

9. Establish and build a metal processing factory in the Choir province and a steel mill complex in Darkhan and Selenge province regions.

10. Build national gold purifying factory. Put the Asgat silver mine site at Bayan-Ulgii province in the market circulation.

11. Build a national manufacturing of construction material that will meet the international requirements to replace imports.

12. Implement a nationwide program such as Mongol Petrol, Mongol Iron, Mongol Copper, Mongol Gold, Mongol Spar, and Mongol Cement within the frames of the new manufacturing policy, to supply domestic demand, increase the type of export products and create manufacturing of products which will replace imports.

13. Develop and implement a program: Mongol Export and Mongol Import.

14. Increase foreign trade circulation by 4 times of the current level.

15. Make infrastructure oriented to reduce difficulties and barriers of foreign trade.

16. Create free trade agreements with foreign countries and create harmonious free exporting conditions by easing and releasing the customs tax.

17. Cooperate with vested world suppliers of copper, coal, cashmere and establish a legal environment to sell those products according to the world market price.

DEMOCRATIC PARTY

1. The government will legitimate the principle to keep the draft budget expenditure balanced, as presented by Parliament.

2. Keep inflation rate within one digit.

3. Increase the amount of salary annually complying with the inflation rate and labour productivity. Do not announce to the public a salary increase in order to prevent a commodity price increase.

4. Limit the expenditure of the state budget.

5. Direct monetary policy to support the economy.

6. Increase the amount of soft loans that the Development Bank will issue to support and improve infrastructure and processing manufacturers.

7. Regulate foreign investment in the state owned companies.

8. Support sectors with a wide range of labor capacity with the policy in order to reduce unemployment.

9. Strengthen the compatibility of agricultural sectors. Focusing on to make them independent from other countries.

10. Support the development of the stock market by supporting the operation of stock exchange.

11. Establish an agreement with residents in a local area to issue special licenses for mineral exploration.

12. The government will grant special mining licenses instead of the Minerals Authority.

13. The State will own 51 percent or more shares of companies operating on mines explored with State money

CIVIL WILL GREEN PARTY

1. Implement a program to accommodate all province dwellers.

2. Devote 40 percent of the income from the mining sector to the development of provinces.

3. Pursue a policy to support and improve SMEs.

4. Initiate and enact a law on state regulation that will establish a relationship between the government and the market.

5. Introduce foreign-invested companies the implementation of Mongolian legislation and regulation.

6. Release investments devoted to developing nano and biotechnology sectors and mining company innovation from tax impositions.

7. Create a legal environment to devote 40 percent of tax income imposed from using the mining sector reserve to the development of the regional areas.

8. Tighten up the hallmark on granting mining licenses and make mining exploiters do the proper rehabilitation in accordance with the standard.

9. Implement natural environmental rehabilitation.

10. Build petrol storage tanks in appropriate places in order to prevent sharp increases in fuel prices.

11. Take 30 percent of Mongolian land under State protection and introduce a new system of protection based on scientific and environmental research.

12. Limit the working force imported from foreign countries and invite only vocational specialists.

JUSTICE COALITION

1. Implement a program to improve the creation and outcome in Mongolia.

2. Make amendments in the law on public property regarding mineral resources, land and pastureland.

3. Renew the law on mineral resources complying with the Constitution of Mongolia, develop a legal environment and create and implement a national policy for the mining sector.

4. Regulate and restrict mineral resource exploration, special license ownership, the amount of the licenses and types of the mineral resources.

5. Modify the Oyu Tolgoi contract so that Mongolia can own no less than 51 percent of Oyu Tolgoi.

6. Have Tavan Tolgoi mine be completely dependent on Mongolian citizens and create circumstance for Mongolians to live wealthy.

7. Establish a law on foreign trade in support of domestic manufacturing.

8. Develop a program to improve Mongolia's exports.

9. Take measures that prevent sudden price drops in agriculturally-originated raw materials.

10. Create a legal, budgetary, financing, and training environment oriented to increase international products, services and intellectual property deals, investments and compatibility.

11. Create a capital market system.

12. Create new system for a fair market and protect consumer's rights.

13. Support domestic production to replace imports.

14. Take oil imports and wholesale under state control. Implement a policy to prevent sharp increases in the price of oil products.

15. Aim to make a free trade agreement with China and Russia.

16. Plan economic development and improve the governing structure and system.

17. Pursue a policy to use natural gas and renewable energy widely in manufacturing consumption.

18. Improve the taxation policy in order to support national processing and manufacturing.

19. Pursue a monetary policy to reduce leasing and loan interests to one digit and keep the currency rate balanced.

20. Adhere to a principle to make export income transactions through Mongolian banks.

21. Regulate foreign-invested enterprises and require them to present financial reports in Mongolian and in Mongolian currency.

22. Develop a national program for Mongolian cars, and aim to bring Mongolian people's knowledge to the new step.

23. Develop the project Millennium Railway that will connect western and eastern regions.

24. Connect province centers to Ulaanbaatar with paved roads and finish implementing Myanganii Zam or Millennium road project.

Link to article

 

More Details on Election Procedures

June 22 (Julian Dierkes, University of BC) The polling stations will be open from 7 to 20h on June 28. Since the voting is happening using voting machines that tabulate votes as voters feed them into the machine, the count should be very quick after the polling stations are closed. The voting machines are set up to report results immediately to the general election commission, rather than any kind of tabulation by the local election officials intervening in the reporting.

This reporting structure suggests that barring any major mishaps or immediate challenges, preliminary results can be expected very quickly after polls close, but certainly on Thursday evening.

There does seem to be some dissatisfaction with the information about the election that is being distributed by the General Election Commission. However, flyers have been distributed to (Ulaanbaatar town centre) households that show samples of the ballot. At least the flyer that was delivered to the apartment we're staying in was specific to the Sukhbaatar electoral district (#26).

On the national ballot, voters here in Sukhbaatar-Ulaanbaatar would mark two names (but organized by party) in the top section that casts their vote in the first-past-the-post riding election, and then mark a single vote for the part in the bottom section to cast their vote for nation-wide proportional representation party votes. For Ulaanbaatar voters, they would have a second page to cast their vote in the Ulaanbaatar city parliament elections on the same system, though with single-member districts. Note that the city election is being held in parallel with the national election for the first time.

Note that most electoral districts send two members to parliament (1 Arkhangai, 2 Bayan-Ulgii, 3 Bayankhongor, 7 Dornod, 9 Uvurkhangai, 11 Selenge, 13 Uvs, 14 Orkhon, 15 Darkhan-Uul,16 Khentii, 17 Tuv, 18 Khuvsgul, 19 Zavkhan, 20 Khovd, 22 Ulaanbaatar – Bayangol, 24 Ulaanbaatar – Khan-Uul, Bagakhangai, Baganuur, 25 Ulaanbaatar – Chingeltei, 26 Ulaanbaatar – Sukhbaatar), though there are six single-member districts(4 Bulgan, 5 Govi-Altai, 6 Govisumber and Dornogovi, 8 Dundgovi, 10 Umnugovi, 12 Sukhbaatar), and two three-member districts (21 Ulaanbaatar – Songinokhairkhan, 23 Ulaanbaatar – Bayanzurkh).

The ballots themselves look like Scantron sheets where voters are required to fill in bubbles to mark their vote. In the polling stations, voters will register, receive their ballot, mark the ballot behind a privacy screen, feed this ballot through the counting machine, insert the paper ballot into a ballot box and exit the voting area, presumably being recorded as having voted, though whether this is by marking identification papers or fingernails or through some other method, I have not found out.

Link to article

 

Parties vs. Individual Candidates

June 23 (Julian Dierkes, University of BC) Following some Mongolian Olympic fun yesterday, we had a number of discussions with others trying to follow the election here in Ulaanbaatar about the relationship between individual candidates and political parties.

I think that everyone continues to agree that the major parties do not generally stand for any specific ideological orientation, though they do present themselves differently with some of their policies.

While the MPP seems to be emphasizing some of the concrete plans it has to improve citizens' lives, the DP is portraying itself as a different kind of a political party with an emphasis of dedication to citizens and clean government.

On the outdoor advertising that we described in an earlier post, a very large share of the posters are for individual candidates, though showing the party logo. Thus they are aimed  at voters in a specific riding and their candidate vote, perhaps assuming that the party vote might benefit from a preference for a specific party candidate. This focus on candidates is also evident in the flyers that are distributed to households and arrive in our apartment as well.

By contrast, advertising on TV is much broader and much more focused on the parties. In this, we learned a lot from Mike Kohn (who lives in Ulaanbaatar, blogs about its parks, tweets, and writes for Agence France Press). In these advertisements, it is generally the parties that are at the centre of the message. Frequently these TV ads are spiced up with appearances by pop stars. The airwaves seem to be dominated by ads from the DP and MPP with other parties only making rare appearances.

The differences in advertising strategies are interesting in that a changed electoral system (the introduction of 28/76 proportional representation seats) implies a change in strategy and resource allocation by the parties and this seems to be visible in these campaign strategies at least by the big parties.

For both parties, their leaders (Batbold for the MPP, Altankhuyag for the DP) do not seem to be playing a particularly prominent role, they are not Spitzenkandidaten as party leaders are in Germany, for example, where they run for seats in parliament, but also present themselves as future chancellors or state premiers.

A number of Mongolian parliamentarians and candidates are very active on Twitter. Some are even very active and clearly rely on Twitter as a way to communicate with fellow candidates but also to be in dialogue with some voters. While I haven't explored Facebook as much in this regard, the level of activity there seems to be high as well. Surprisingly, however, social media do not make an appearance in party ads at all. There are no URLs, Twitter or Facebook handles listed on campaign posters or in TV ads, though they do make an occasional appearance on materials from the smaller parties or individual candidates' websites. Their is virtually no social media presence by the parties themselves as far as I can tell.

Link to article

Related:

Less Visibility for Mongolian Ultra-NationalistsMongolia Today Blog, June 22

PM Batbold out for a Run with MPP Candidate GanhuyagMongolia Today Blog, June 23

Election Songs of PartiesMongolia Today Blog, June 24

 

Eznis Airways Receives Its First Boeing 737-700 from ILFC

Airline Will Introduce International Flights

LOS ANGELES, Jun 25, 2012 (BUSINESS WIRE) -- International Lease Finance Corporation (ILFC), a wholly owned subsidiary of American International Group, Inc. , announced today that it delivered a Boeing 737-700 aircraft to Eznis Airways, the largest Mongolian privately owned airline.

The new aircraft will expand Eznis Airways' international operations and be used to better serve the country's rapidly growing air traffic demand. As of the first quarter of 2012, inbound and outbound international traffic in Mongolia has increased by 30% compared to the same period last year.

"The addition of the Boeing 737-700 to our fleet marks an important strategic milestone for Eznis Airways. This new aircraft will allow us to provide quality service on international routes from Ulaanbaatar," said Munkhsukh Sukhbaatar, Chief Executive Officer of Eznis Airways.

"ILFC is proud to provide Eznis Airways' first 737 aircraft. This aircraft is clearly an important milestone in the airline's efforts to secure its place as a leading airline in this rapidly growing region and increase its international market share. We look forward to a long and successful business partnership with ILFC's newest customer," said ILFC Head of Asia-Pacific Dave Nixon.

Eznis Airways currently owns the largest air fleet in the country and the addition of this Boeing-manufactured airplane marks its 7th aircraft. The 737 series is a medium-range twin-engine narrow-body jet airliner and is the best-selling jet airliner in the history of aviation. The aircraft can fly nonstop to Beijing, Seoul, Tokyo and Hong Kong from Ulaanbaatar.

About Eznis Airways

Eznis Airways is the leading Mongolian regional airline with the largest network of domestic destinations within Mongolia, and highest flight frequency on these routes. The airline was established on January 6, 2006 by Newcom Group, one of the largest holding companies of Mongolia. The airline operates domestic scheduled and charter flights to 11 destinations in 9 aimags (provinces) of Mongolia and operates international scheduled service to Hailar in China's Inner Mongolia region and Ulan-Ude in Russian Federation's Buryat Republic, and charter services to points in China, Russia and Kazakhstan. www.eznisairways.com

About ILFC

ILFC is the world's largest independent aircraft lessor measured by number of owned aircraft. ILFC's portfolio consists of over 1,000 owned or managed aircraft, as well as commitments to purchase 245 new high- demand, fuel-efficient aircraft and rights to purchase an additional 50 such aircraft. www.ilfc.com

About AIG

American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange. www.aig.com

Link to release

 

Crude steel output in Inner Mongolia up 16.7 percent in May

June 25 (SteelOrbis) Crude steel production in the first five months of the current year in China's Inner Mongolia region totaled 7.51 million mt, increasing 9.6 percent year on year. In addition, crude steel output in Inner Mongolia in the month of May alone amounted to 1.63 million mt, increasing by 16.7 percent year on year.

Finished steel product output of the first five months in Inner Mongolia totaled 6.77 million mt, up by 19.7 percent year on year. In May alone, finished steel product output in the region reached 1.58 million mt, rising by 26.3 percent year on year.

Link to article

 

EBRD Impact Brief: Group lending or individual Lending? – Evidence from Mongolia

Assessing the impact of different lending techniques

May 2012 (EBRD) --

Link to brief

 

MONGOLIA RECEIVES RIGHTS TO FLY BANGKOK, SINGAPORE VIA SHANGHAI, TIANJIN

June 22 (InfoMongolia.com) The Administrations of the Civil Aviation Authorities of Mongolia and the People's Republic of China held a meeting in Ulaanbaatar on June 18, 2012.

At the meeting Mongolia was represented by the State Secretary of the Ministry of Roads, Transportation, Construction and Urban Development J.Bat-Erdene, where the People's Republic of China was represented by the Deputy Administrator of the Civil Aviation Administration of China Xia Xinghua.

Social, political and economical relations between Mongolia and China are broadening in all spheres and industries, thus the passenger flow in between the two countries have been obviously increased. Hence, in order to keep up with such increasing pace and to expand and develop the air travel market, the two countries sat on negotiation table, where they have agreed upon increasing the air carrier number up to two to three times in each flight routes.

Accordingly, the flight frequency between the two countries has been increased. More specifically, in routes Ulaanbaatar - Beijing, previously 14 flights were conducted in a week, but the number has been increased to 21 flights a week, also previously 7 flights were in a week to other areas of China and now have been increased to 21 flights a week.

In compliance with the negotiations, Mongolia received permissions to conduct flights to total of 10 destinations across China and flights to Bangkok, Thailand and Singapore via Shanghai and Tianjin cities of China. In conclusion, during the meeting the sides have agreed upon forming a working group on establishing intergovernmental agreement between the two countries on partnership in search and rescue (SAR) fields of the civil aviation sector.

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Mongolia: Between a Rock and a Hard Place

June 25 (ISN Blog) Given Mongolia's potential to become a future commodity powerhouse, it does not seem strange that recent legislation that aims to cap foreign investment and ownership was a cause for concern among the domestic and global business community. The Strategic Foreign Investment Law aims to confront two major challenges to Mongolia's social and economic development. Firstly, the regime has to respond to domestic demands that resource wealth is used to benefit the wider population.  Moreover, Mongolia also seeks to reduce its dependence on its two powerful neighbors and in particular to limit Chinese influence over its economy. Neither of these dilemmas will be easily resolved.

After intense domestic lobbying, the Mongolian Parliament approved a watered-down version of the Strategic Foreign Investment Law on 17 May. Initially, the law stipulated that foreign investors seeking to buy a stake of more than 49% in Mongolian companies required the approval of Mongolia's Foreign Investment and Foreign Trade Agency (Fifta) and Parliament.  However, following amendments aimed at appeasing foreign investors, the conditions only apply to companies involved in Mongolia's 'strategically important' mining, financial, and media and telecommunications sectors and when deals are valued at above $76 million. Yet deals in which the buyer company is even partially in state ownership will require approval regardless of the sector of the business.

Significantly, the law comes ahead of parliamentary elections to be held on 28 June. Accordingly, the legislation can be seen as a measure to satisfy populist elements and resource-nationalist demands. Yet actions that upset the global investor community could be harmful to Mongolia's economic aspirations. The country is dependent on foreign capital, lacks human resources and technical expertise and, crucially, access to sea ports necessary for exploiting its mineral wealth. Yet Mongolia also has a history of quickly introducing legislation and then repealing it after it has adversely affected the domestic economy. Indeed, given that the country's political and economic elites largely overlap this may prove to be another piece of legislation that disappears after the upcoming elections.

However, for the time being the law can be seen as part of Mongolia's efforts to limit foreign – and in particular Chinese – ownership. The legislation was triggered by Canada's Ivanhoe Mines' plan to sell its 58% stake in SouthGobi Resources to the Aluminum Corporation of China (Chalco). This further reflects widespread concerns about the growing Chinese influence within Mongolia. While China has been Mongolia's largest trading partner since 2005 (not to mention foreign investor), anti-Chinese sentiment appear to be on the rise as a result of the influx of Chinese businessmen and migrant workers.

Sandwiched between China and Russia, Mongolia has long faced the dilemma of which neighbor to look to for economic and political support. However, since the fall of the Communist regime, Mongolia has pursued a 'third neighbor' policy that aims diversify its investment and trade relations beyond China and Russia. Since then, Mongolia has boosted ties with the United States, Canada, the European Union (Germany and the UK in particular) as well as South Korea and Japan.  Beyond the economic realm, Mongolia has also contributed to UN peacekeeping missions, deployed troops to Iraq, and conducted joint military exercises with a host of states. In May 2012, Mongolia attended the 2012 NATO summit in Chicago under auspices of the Individual and Cooperation Program.

Mongolia also participates in regional initiatives such as the ASEAN Regional Forum. The country also holds observer status within the Shanghai Cooperation Organization (SCO) and is actively seeking membership of organizations like the Asia-Pacific Economic Cooperation (APEC). Yet regional initiatives or cooperation with NATO do not provide Mongolia with any concrete security guarantees. Regional cooperation across East Asia – which is mainly focused on the economic realm – does not in its current form alter the balance of power politics still dominant in the region's security dynamics. And while globalization may diminish the significance of physical distance, Northeast Asia's economic and security dynamics ensure that Ulan Bator needs to maintain stable relations with its two powerful neighbors.

Indeed, Mongolia's geostrategic location between both countries eliminates the chance to develop 'third neighbor' policies in certain instances. In 2010, for example, Mongolia had only two options in terms of connecting its railway infrastructure to wider rail networks. And while Mongolia eventually chose Russia, Sino-Russian competition for the economically important railway link can be seen more broadly as a geo-economic contest for influence in Mongolia. Consequently Mongolia can neither fully escape its regional position nor conduct 'third neighbor' policies that risk relations with China and Russia. Rather, the policy of diversifying relations can be understood as an attempt to gain additional leverage the relations to Russia and China.

In an age of diminishing energy and natural resources, Mongolia's vast reserves of coal and minerals mean that the country is likely to become a focus of global economic and security interests. This makes the dilemmas confronting Mongolia all the more challenging. An abundance of natural resources are likely to make Mongolia the site for further foreign investment.  As a result, domestic debate over the control and distribution of resource wealth is likely to intensify as more foreign companies seek to invest in the country. So despite a recent upsurge in anti-Chinese sentiment, Beijing may not be the only 'outside' actor that causes concern regarding foreign ownership of Mongolian enterprises.

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Standard - Oyu Tolgoi

June 25 (Mongolian Economy) The Oyu Tolgoi project's development train is ready to board its passengers. Those with tickets sit comfortably in their seats, while others rush to the station to get one. Mongolians have already started to see the benefits of the Oyu Tolgoi project. The globally recognised investment that has brought new standards to Mongolia's mining industry has had immense success. Thus, as project reaches its final stage of development there will be major changes entering our daily lives.

Mongolia won't lose its pace on the fast track to economic growth. As the development train heads towards its final stop at full speed, the hope is development shines brighter. The nation aims to emerge as another "Asian tiger".

Foreign investment is followed by financial freedom, management and technological know-how. Huge investment allowed Mongolia's professional education sector to introduce itself to new instruction technologies, methods and financial freedom. The Oyu Tolgoi project brought new standards to Mongolia through its MNT 168 billion in education programmes. Officials have noted that Oyu Tolgoi's advanced management method has become a reality. It aims to impart new standards, not only in the mining industry but also in the lives of common people. Industrialisation has proven its economic advantages as Mongolians can now benefit from these world standards with the larger salaries paid out by the Oyu Tolgoi project.

Everyone dreams of living happily. It is delightful to hear that the project is lending a helping hand with preparing society. Responsible mining has entered Mongolia and skilled professionals are being delivered. Around 30 lecturers are heading to Australia for retraining. Thirteen managers from the mining industry received the opportunity to study in Australia. The Oyu Tolgoi project has granted scholarships to foreign schools to 30 students as well as 200 scholarships to domestic schools. The project the developers have also started a campaign to train 1,200 teachers for fluency in English, and aim to make Mongolians bilingual.

In addition, the Oyu Tolgoi project has invested MNT 36 billion into 47 schools throughout the country. Cities such as Darkhan, Erdenet, Nalaikh, Govosumber and Umnugobi Aimag have also received a slice of the Oyu Tolgoi pie. New training and manufacturing centres are being built and expanded within those regions. Considering all these achievements, it seems the project has been fulfilling its aim for education.

Sustainable development and social responsibility are the calling card of Oyu Tolgoi. Recent official news stated that a technical training centre with the capacity to hold up to 150 children was commissioned  for Khanbogd Soum. Community residents have started to witness the many advantages brought by the Oyu Tolgoi project. Children no longer have to rush to the city to attend school. New jobs have been created. In short, the Oyu Tolgoi company is investing in the Mongolia's economy as well as the intelligence of the population.

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The Next Move: A Look at Mongolia's Oil Sector

June 25 (Mongolian Economy) What is a country with 1.6 billion tonnes of oil reserves, of which 196 tonnes are proven, to do? Must it be exploited? The answer is no. Creating a suitable legal environment would be the most appropriate choice. Does Mongolia have such an option?

 "The petroleum law is one of the few laws under the name of Mongolia, meaning it is considered to be very strong law that has been enforced very strictly", said D. Zorigt, minister of natural resources and energy, at the international legal forum held last month at Ikh Tenger. This statement triggered arguments among attendees. Some said although Mongolia has a great amount of oil resources, it is completely dependent on Russia. This can be directly linked with the law on oil and its legal environment. However, the head of the ministry of that sector argues the opposite. It was his opinion that making industry more beneficial and profitable for the government, domestic companies and the nation would require revision to the petroleum law.

The law, which was ratified in 1991, needs some serious adjustments and revision. According to experts from the Petroleum Authority, it has become an aggregate of informal agreements that profiteers exploit as the monitoring and regulation of the sector weakens.  Fourteen domestic and foreign-financed companies together can barely exploit 300 tonnes of oil annually, which only takes a few hours in Saudi Arabia. That sum might sound small, but in a nation like Mongolia with a small population, it is not as bad as it appears. The minister of the oil sector said it had the goal to exploit 1.5 tonnes of oil by 2015. Last year, Mongolia was ranked 33rd from over 100 countries for its oil resources. If Mongolia could take advantage of it, it would have a bright future ahead of us.

Slipping Policies

The Mongolian petroleum industry can be compared to a toddler who is just learning to walk. For that reason, global giants in the industry have expressed their interest. However, they want to eliminate the current petroleum policy on production sharing between the government and companies, letting a cool breeze blow over those old law papers.

J. Oyungerel, the board director of Petrovis, said at the legal forum that domestic oil importers are willing to support this aim.

"After lot of hard work, we exploit very little oil", said Oyungerel. "However, up to 75 percent of it goes to the government, according to the production sharing agreement. In other countries like Mongolia, a maximum 62 percent is taken. The industry needs a stable legal environment. If the law was revised, then our initiations and opinions must be heard and included".

"They go to quite a lot of trouble taking surveys and doing research. But the final results are often unrecognizable and completely different. Speaking directly, we don't want to share the products we have worked so hard to deliver".

After having worked so hard, nobody would want to give away his or her profits for free. However, the petroleum sector in Mongolia is different because the natural and ground resources in the Mongolian territory are legally the property of the nation. Thus, citizens want to benefit from this resource as they will from the shares of Erdenes Tavan Tolgoi. Considering this, the government has decided not to eliminate its production sharing policy in the revisions to the petroleum law that were initiated by the president. To share or not to share? Which side will win?

Who will benefit from monitoring petroleum imports or gathering profits by a production sharing policy? What results can it bring?

According to petroleum importers, the government tries to minimize their importance, close their profit circulation, and, finally, eliminate them from the market by taking the petroleum sector in its own hands. In addition, there are rumours of its intent to erase domestic companies from the market, allowing the government to invite big foreign investors to strike product sharing agreements with them.

However, the government said it intends to accumulate the natural resources, compounding national petroleum reserves instead of selling the crude oil directly. Doing so would bring stability to fuel prices. It is irrelevant to ordinary citizens which side wins this battle. The most important issue is producing fuel domestically and reducing dependency on foreign nations. If the fuel price decreases, it would be helpful to all. However, the government must not neglect domestic traders who have sweat blood running their businesses. For example, the government should clarify vague resolutions, including issues  on the granting of special exploitation licences and their transference.

Foul Deals Effect Foul Results             

"The production sharing agreement causes various disputes around the world", said British Ambassador Christopher Stuart, at the legal forum. He added "Stability must be sought. Governments tend to seek profits by privatising this risky sector. The industry has to have a strict taxation and budget policy. The revised law should include exact sums for taxation".

"Comparisons with foreign markets could be effective in the future. Big investments and tonnes of experiences are crucial in Mongolia's still developing petroleum sector. Thus, developing policies that could attract investors would be efficient. The sector itself is a risky one. For that reason, investors might not be interested if taxes are too high".

"At present, Indonesia declares it will take 85 percent of its domestic petroleum trade. As a result, the foreign investment rate has fallen because executives are not approving of such demands. Ratifying the law doesn't solve problems. Enforcement and improvements would lead to great production".

Forum participants noted that in under-populated countries like Mongolia, the sharing ratio in the production sharing agreement with the government usually takes about a third of the profits.

The petroleum law of 1991 allowed domestic companies to make their agreement classified for exploration and exploitation when cooperating with foreign companies. This means if anything goes wrong, the situation will be resolved according to the agreement, not the law. Simply said, if one runs away with all the profits from the petroleum operation, he cannot be held legally responsible because the cooperation was based on the agreement rather than the law.

Any foul articles could be mentioned in the agreement. However, before legalising the agreement it must be reviewed the National Consulting Authority. But Mongolian companies have to be cautious. Industries based on natural resources are developing. Thus, leaving loopholes in these laws and regulations could lead to negative consequences for Mongolians.

The government must function to reserve shares for our future generation by implementing strict laws and strong regulations.

Link to article

 

Competitive Changes in Competition

June 25 (Mongolian Economy) There is a story about a man who gave advice to his brother who was just starting a small business of his own. His first piece advice was to never compete with the prime minister's company or he would end up homeless. Second, he told him he should gather information about the companies owned by the prime minister's wife and children. Third, he should know more about the companies owned by the prime minister's friends before going ahead with anything. And then, if there is any space left for him he could start his business. Indeed, the government is too involved in the marketplace and is allowing a network of corruption to materialise by misleading citizens with its vague regulations and ordinances.

"Good companies and quality products come only through competition", said D. Enkhbat, a member of Parliament. "Even sport masters are born as a result of it. Thus, tackling any kind of conspiracy by supporting fair competition in both business and sports would lead to development". It is a good sign that Mongolia has an independent agency that regulates fair competition and enforces its Law on Fair Competition. However, regulations on fair competition have never been enforced to the fullest extent and monitoring is week.

Fair competition guides development while enhancing a nation's economy and improving competitiveness.

Together Consumers Can Protect Their Rights

An organisation is needed to monitor and regulate fair competition. It must be a strong institution that cooperates with police and court officials. The consumer protection organisation, initiated by citizens, should represent civil society. In Mongolia the Fair Competition Organisation is overloaded. It is stretched thin with too many responsibilities, from regulating fair competition among enterprises, protecting consumer rights and enforcing the Law on Advertisements and Tenders.

Looking at its structure and its staff of just over 40 personnel, the organisation does not seem to have the capacity to achieve everything it is tasked with. Theoretically, the policy and responsibilities of the organisation are bigger and broader than any other organisation. But its staff, too, is confused by vague laws and thus make ineffective decisions. In the early 90s, the National Committee for Consumer Protection (NCCP) was established. Unfortunately, the committee has never had a voice that could reach the national stage to protect the rights of consumers. In Japan, for example, it has an organisation with over 600 rural offices across the country to accept consumers' complaints. It gathers all the complaints in a database and makes analyses for further resolution. Australia has its Fair Trade Law, which focuses on protecting consumers' rights in addition to securing fair competition and a sustainable economy.

During the Competition Policy and Regulations sub-session of the Fostering Inclusive Economic Growth Through Legal Reform forum, many participants criticised the fact that the NCCP is in sleep mode.

"Businessmen raise product prices overnight after hearing rumours about cash distribution or fuel price increases", said L. Dashdorj, advisor to the president. Last December fuel prices rose by up to MNT 260, which created havoc for many citizens. But while fuel prices have dropped, other commodity prices that increased along with fuel have not fallen despite today's cheaper fuel prices. Instead prices continue to rise. In addition to those consumer protection organisations, there is the City Consumer Protection Association. Unfortunately, it remains silent.

Recovering Competition

There was much criticism at the economic forum that there is no mechanism to direct the legal responsibilities. Companies will try to profit as much as they can by utilising loopholes in the law. Any entities profiting well from a cartel are subject to a heavy fine and could be charged with a crime.

Chile, a country with an economy that can be compared to Mongolia, has done much to improve its regulation of competition within the last 10 years. The country established an independent competition court and raised its monetary penalties. It also revised its law for criminal procedures while fortifying its monitoring and punishment abilities. In addition, Chile established a non-government organisation called the Office Against Economic Crimes.

"Chile has the same development as Mongolia, so it would be a suitable model for Mongolia to take from its experience on competition", said Fernando Bertoli, director of Chemonics International and technical and management advisor to the USAID-funded Business Plus Initiative. The international advisor to another project funded by USAID, the Economic Policy Reform and Competitiveness project, Pablo Garcia, gave speeches to the Fair Competition and Consumer Protection in 2010. These are few example of how an international organisation willing to help Mongolia can improve  competitiveness for the nation.

However, the government and state authorities remain silent. Foreigners have shared their experiences and taught what should be done. There would be nothing to do if Mongolia had the strongest competitiveness in the world already. Meanwhile, businessmen benefit from their cartel agreements.

Strangling Competitiveness

Policy maker Enkhbat said competitiveness is a call for fair competition goals that create equal participation in business for all citizens and eliminate obstacles. According to him, it is the most important part of the concept to give citizens on economic freedom. However, Mongolia doesn't have the proper environment for robust competition.

Presidential advisor Dashdorj said the conflicting laws on competition include too many incomprehensible articles. A third of the law mainly directs fair competition, introduces status-oriented activities for consumer protection organisations, and manoeuvres regulations that would otherwise contradict one another. However, the law has left out important issues such as consumer protection and supportive actions towards small- medium enterprises and businessmen.

"The law did not include any suggestions from the private sector and it did not correspond with the domestic market. A third of the law was taken directly from the Russian Competition Law", said the head of Civil Law Department of the National University of Mongolia's law school, B. Temuulen.

Temuulen noted that in order to bring competitiveness to the business sector, the government needs to improve its economic legal environment and its economic policies. The Law on Competition would be more suitable to the legal environment for business if it was based on a civil administrative law. Doing so would create regulations that would allow for market participation.

The most common problems in business are administrative issues allowing cartels to continue operating unchecked. If the sector is not reformed as soon as possible, it could end up rotting out. Talk about economic growth, development and business innovations would be useless. The country would be steeped in corruption from the inside out, while citizens would groan from their poverty.

Strong organisations that can identify whether companies are operating as a cartel must be established. Such a mechanism would instil healthier competition. It is crucial that Parliament revise the Law on Competitiveness for the national economy and the development of business.

Link to article

 

The secrets of a wooden hammer

June 25 (Mongolian Economy) A principal to economic growth is the effective and fair pursuance of agreements. This is especially so when a country aims to contract an economic agreement with domestic and foreign investors. However, behind all these businesses there has to be a sincere court and strict laws. The Office of the President organised the Fostering Inclusive Economic Growth Through Legal Reform forum, which included a sub-session for a discussion about the competencies of legal professionals regarding commercial disputes. The following is an interview with N. Lundendorj, the vice principal of the National University of Mongolia School of Law.

Is Mongolia ready to offer full legal services during this time of rapid economic growth?

Law science has its own infrastructure. One of its main elements is issues of juridical education. The Open Society and Its Enemies by American political scientist Karl Popper was translated into Russian in 1990. Its introduction, one of my favourite passages, was dedicated to Russian readers. He wrote if Russians want to establish a market economy, they have to start preparing brand new lawyers. Thus a new economy, new politics, and new ideology need both good lawyers and economist to develop.

No matter how perfect a proposed economic project is, if there is no precise legal environment it welcomes a doomed fate. The economy also has to be regulated by laws. However, laws can't be developed without lawyers. Thus, their development is a priority. Knowledge, experience and practice are important. Mongolia's lawyer regime was established through practical experiences. It reached its current status by experimenting with people and their freedoms.

There is a saying that doctors from a third-world country have better medical skills than those in developed countries because they are able to practice on real human beings. Mongolia's lawyers are the same. They only need a bachelor's degree instead of further training.

Does the government support the legal decisions made by lawyers?

I have truly nothing to say about what the government has done to prepare lawyers. They carry the responsibilities of the market economy's transition, innovations in society, politics and the economy. The Legal Innovation Programme was introduced in 1998. The programme has includes many passages on preparing lawyers. A few years ago, the Ministry of Justice and Home Affairs concluded the programme. However, no significant summary was made to how government is responsible. Not a single lecturer of law at NUM (The National University of Mongolia) has been sent abroad by government through scholarships. Not a penny from the budget has been invested in education for this sector.

In short, Mongolia's government is doing nothing. But the faculty members of NUM have joined forces with great effort. NUM's law degree requires 150 credit hours of classes, of which 25 hours are devoted to skills training. This training allows students to gather knowledge through experience solving cases. In foreign countries, this kind of training is received by students after completing their bachelor's degrees. Students specialise in certain area and study for up to five years.

As the Mongolian economy grows, commercial disputes continue to arise. Do Mongolian lawyers have enough knowledge and experience to participate in international commercial disputes?

It is true that economic development is allowing such disputes to arise. However, Mongolia doesn't have any specialised lawyers in this field. I would like to say that the problems of legal professionals in commercial disputes are not our business. We provide education for a bachelor's in law. It is impossible to provide training in solving disputes in a country that only offers bachelor's programmes.

In the classic sense, bachelor's degree programmes aim to pave the way of the very first steps to becoming a lawyer. However, graduates must pursue higher degrees in order to develop. But we don't have such an educational system in Mongolia. Instead of ignoring the situation, lecturers try their best to teach their students. Around 20 credit hours are dedicated to educating students in this area. However, the training doesn't meet international standards. Because we can't do it by ourselves, the government needs to give a helping hand.

How can the government help?

The law on the legal status of lawyers was passed this year. For the very first time the idea of offering advanced trainings to legal professionals was raised. Based on that law, an educational system has to be established that can deliver professional, skilled lawyers. The seeds must be watered to grow.

It is not appropriate to talk about skilled lawyers if there is no dedicated educational system. It is no secret that even judges are not skilled enough to write court procedurals properly. Only a few write their procedurals according to the instructions. That is because they are not skilled. Foreign countries have started to prepare their lawyers at the professional level because they know exactly what the world demands. Let's set out to create something completely new. Instead, we could learn how others have reached their current levels of development.

You just mentioned judges. Some say that they lack ethics. What do you think?

In developed countries judges are selected not only by their knowledge and education, but also by their character. For example, one could be humble and modest while another is bright and charming. One's character doesn't change after becoming a judge. However, if that bright one is chosen as a judge, he or she would have to work hard to understand the complexities of cases.

Thus, we can't leave the court to those who aren't meant to hold the gavel. Personal character should be considered important too. High criteria, which we don't have in Mongolia, are hard to fulfil. Ethics are directly related to character.

Some lawyers at the forum noted that it was impossible to fulfil their duties because the laws they must follow are unclear. What is your opinion?

Here's one classic example. Let's say a judge is about to make a decision. But the reality is we cannot deduce what a jurist based his juridical decision on. We don't have the legal environment to judge that.

Link to article

 

Mongolia: A "Moderately Free" Economy – 2012 Index of Economic Freedom

(Heritage Foundation & Wall Street Journal)

Mongolia's economic freedom score is 61.5, making its economy the 81st freest in the 2012 Index. Its overall score is 2.0 points higher than last year, mainly reflecting increased scores in fiscal freedom and government spending. Mongolia is ranked 12th out of 41 countries in the Asia–Pacific region, and its overall score is above the regional average.

The Mongolian economy registered one of the 10 largest score improvements in the 2012 Index, regaining the status of "moderately free" economy. Renewed progress in advancing economic freedom has restored momentum for institutional reforms that are critical to ensuring long-term economic vitality. Economic reforms in recent years have supported economic expansion and reductions in poverty. Mongolia's developing entrepreneurial sector has benefited from increased access to financing following banking reforms. Competitive tax rates and an open trade regime are also promoting the emergence of a vibrant private sector.

Although Mongolia experienced no decline in any area covered by the Index, corruption and the weak rule of law remain drags on economic development. Accelerating judicial reforms, along with continued efforts to streamline public administration, will help to sustain economic growth and broaden the improvement of living standards.

BACKGROUND

Mongolia emerged from the shadow of the former USSR with the adoption of a multi-party sys­tem and a new constitution in 1990. Political tension between the Mongolian People's Party, which has a majority in parliament, and the Democratic Party, which holds the presidency, has been considerable since 2009 and heightens the potential for parliamentary deadlock. Mongolia is a primary conduit for trade between Russia and China. At $2.4 billion, trade with China constituted 47 percent of Mongolia's total trade in 2009. Livestock herding employs a majority of the popula­tion, but the services and industry sectors account for about 80 percent of GDP. Mining continues to attract the largest portion of foreign investment, contributing to strong economic growth.

RULE OF LAW

Property and contractual rights are recognized, but enforcement is weak. The judicial system remains inefficient and vulnerable to political interference. The government lacks the capacity to enforce intellectual property rights laws. Pervasive corruption continues to undermine the foundations of economic freedom and adds to the cost of conducting business. Anti-corruption measures are not enforced effectively.

LIMITED GOVERNMENT

The individual income tax rate is a flat 10 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax (VAT) and an excise tax, and the overall tax burden amounts to 20.6 percent of GDP. Government spending is equivalent to 35 percent of total domestic output. The budget balance has turned to a surplus after recording deficits over the past two years, and public debt stands at around 40 percent of GDP.

REGULATORY EFFICIENCY

The regulatory framework continues to evolve. The minimum capital requirement for launching a business and the cost of completing licensing requirements have been reduced. Employment regulations are relatively flexible, but the labor market lacks dynamism. Inflation has been volatile, although stability is improving. Most price controls and subsidies have been phased out, but the state influences prices through the public sector.

OPEN MARKETS

The trade weighted average tariff rate is 5.1 percent, and costly non-tariff barriers further constrain the freedom to trade. Foreign investment is officially welcome, but the legislative framework regarding investment is still developing in an effort to enhance efficiency. Despite the challenging global financial environment, the financial system has undergone rigorous modernization. The banking sector remains relatively well capitalized and stable.

Link to Mongolia page

 

NUMBER OF NATIONALS FROM CHINA RESIDING IN MONGOLIA WILL NOT BE INCREASED, SAID OFFICIALS

June 22 (InfoMongolia.com) Regarding the recent rumors that citizens of the People's Republic of China (PRC) are illegally immigrating into Mongolia in large numbers and has reached 30,000 nationals.

Accordingly, Mongolian Immigration Agency (Office of Immigration, Naturalization and Foreign Citizens) has held a press conference, where the Director General of Mongolian Immigration Agency D.Murun and Director of the Naturalization and Registration Department B.Tsengel have given information on the number of foreign people residing in Mongolia and the issue of PRC citizens.

According to their information, as of June of 2012, a total of 42 thousand nationals from 128 countries are residing on the territory of Mongolia for business purposes. In the article of the Law on Legal Status of Foreign Nationals it cites, "The number of foreign citizens residing on the Mongolian territory for business purposes is not to exceed more than 3% of the total Mongolian population, where the number of citizens from one country is not to exceed 1%". As of today, a total of 27,496 citizens of China are residing in Mongolia for business purposes, which is an estimate getting very close to 1% of the Mongolian population.

Director General of Mongolian Immigration Agency D.Murun reported, "According to the recent data given, the population of Mongolia is currently at 2,811,866 people. Thus, its 1% would be equal to 28,116 persons. It is true that the number of citizens from China is reaching close to this number. We are obliged to work on containing this number. This number will no longer rise.

Mining and road construction works are increasing in the past 3 years, where foreign workers, mainly from China, are being employed. We will resolve further action according to the law. The upcoming government must improve the legislation regarding this issue. As for immigrant citizens, the allowed number of immigrant citizens in Mongolia should be at 14,058 nationals, whereas a total of 2,076 immigrants are residing in Mongolia currently."

The reporters were also interested in the growing number of the Philippines citizens. In reply they answered, "A citizen of the Philippines is allowed to stay for duration of 21 days without a visa. Currently, there are 440 registered Philippines citizens, out of which 325 citizens are employed."

Link to article

Related:

WORKERS FROM CHINA WERE GIVEN A WARNING TO  WORK WITHIN THE FRAMES OF MONGOLIAN LEGISLATIONSInfoMongolia.com, June 22

 

UNIMAS to commercialise Mongolian award winning research

KOTA SAMARAHAN, June 25, 2012 (Bernama) Universiti Malaysia Sarawak (UNIMAS) plans to commercialize its findings of the water treatment research from sago processing factories which was awarded the "Best CEO Award" in the ECOPRENEUR 2012 held in Ulaanbaatar, Mongolia, last week.

Its vice chancellor Prof Datuk Dr Khairuddin Abdul Hamid said it was hoped that with their readiness to closely cooperate with the involved industry, would help ensure environment in Sarawak to remain clean and free from pollution.

"UNIMAS has actually carried out a lot of scientific research related to the environment preservation and the latest was the finding on the water treatment research on sago processing factories which we will be commercialized for the benefit of the sago industry in Sarawak," he told reporters here, today.

He said, UNIMAS would also conduct research on wastewater treatment from palm oil factories. Dr Khairuddin said UNIMAS was in the process of finding a formula to tackle oil spills in the sea through sediment methods or using bacteria.

Speaking of the ECOPRENEUR 2012 award, he said a business plan on a water treatment plant for a sago processing factory was submitted by Dr Azham Zulkharnain from Unimas' Department of Molecular Biology and adjudged the winner of the Ecopreneur competition which came with USD100,000 (RM310,000).

Members of Azham's team included Dr Zainab Ngaini, Prof Madya Dr Nazlina, Nordiana Ahmad Nordin, and two students, Mohd Ismail Salim and Vannessa Lawai while the research was funded by the Ministry of Energy, Green Technology and Water.

Link to article

 

".МОН" CYRILLIC DOMAIN ESPECIALLY FOR MONGOLIA USE WILL BE OPERATIONAL SOON

June 22 (InfoMongolia.com) On June 22, 2012, the Internet Corporation for Assigned Names and Numbers (ICANN) has officially announced that preparations for the .мон and .мн Mongolian Cyrillic domains have successfully been completed especially for Mongolia use.

The registration of the users of the domain will start soon. According to the official reports, Mongolia became the 30th country to request Multilanguage ccTLD (country code Top-Level Domain) and the 20th country to have its own IDN ccTLD (Internationalized country code Top-Level Domain).

As of today, there are only three Cyrillic domains used all around the globe, the Russian Federation - .рф, Serbia - .срб and Kazakhstan - .каз domains, although there is one Cyrillic domain script besides above three - Ukraine - .укр but it is not delegated yet.

ICANN is a nonprofit private organization headquartered in Los Angeles, California, United States, that was incorporated on September 30, 1998 to oversee a number of Internet-related tasks previously performed directly on behalf of the U.S. government by other organizations, notably the Internet Assigned Numbers Authority (IANA), which ICANN now operates. ICANN is responsible for the coordination of the global Internet's systems of unique identifiers and, in particular, ensuring its stable and secure operation.

IDN ccTLDs are specially encoded domain names that are displayed in an end user application, such as a web browser, in their language-native script or alphabet, such as the Mongolian Cyrillic alphabet.

Starting November 16, 2009, nations and territories could apply for IDN ccTLDs. Egypt, Saudi Arabia, the United Arab Emirates, and the Russian Federation were among the first countries to apply for the new internationalized domain name country code toplevel domains.

Link to article

 

"Too many cooks spoil the broth" – Michael Aldrich

June 22 (Mongolian Economy) Michael Aldrich is a partner at Hogan Lovells law firm in Mongolia

What is your impression about this legal reform forum?

Last year's forum was a larger event with a larger invitation list and named a much wider scope of matters. The difference with this forum is that the focus is slightly different. On one hand we are speaking about international standards of doing business suitability to addressing the problems within Mongolia or to be able to facilitate the conduction of business in Mongolia. It is more so geared to business issues. How can we make the banking sector more efficient? How can we change the laws dealing with our arbitration in order to help and be able to resolve disputes more rapidly?

So the focus is more on businesses. It's more on the practical side of things, less so on courts, and less so on the ideas about passing laws in order to deal with higher justice issues. But more so to looking at how a law can facilitate business in order to encourage economic growth.

What would you say about the legal environment of Mongolia?

I disagree with many people who paint it very negatively. My view point is that looking at the law fairly, what you see is a legal system that aspires to promote the freedom to contract and very much memorializes certain rights such as the rights to compensation in event of expropriation. Fundamentally, the basis of the legal system is something that is much closer to that which exists in the west than China, Vietnam or Indonesia.

At the same time, there is a tendency to think that all we have to do is enact a law and that law will solve the problem. I think that perhaps that is in some ways a reflection of traditional Mongolian thinking. Mongolians have always embraced the idea of a code of behavior. If you promulgate a new part of a code, people would follow. But the problem is, in this complex age, many times when you are looking at things as complex projects as the creation of new electricity, heating and power stations—these things are fairly complex. What we need is more than just simply supporting the idea, but to take those concepts and bring them towards implementation.

You have a great legal concept, but if you can't take the law and be able to fashion it into a contract that people understand, then there really isn't that much advancement.

How can we enforce the laws so that everyone complies with them?

I think it is important to encourage Parliament to not only think of the laws, but also think about the contracts that will be used to implement the laws. For example, there is a concession law that was enacted about two years ago. Prior to its enactment, the focus was exclusively on the issue of how do we draft this law, and what do we provide for it. But once you have the law, no one knows how to apply. There were a series of private sector attempts at a concession agreement that were pretty underwhelming. My thought was, fine you can speak about the law but why didn't Parliament authorise people to focus on preparing a concession agreement that would comply with Mongolian law, would be written in a way that is compliant with international standards, and be regarded as an equally balanced document—something that could be then used internationally, the international community could feel comfortable with, and the Mongolian community could feel comfortable with.

That does not happen many times because in my opinion people think when you get to the tedium of actually writing contracts that it is not as exciting. That can be boring, but that is really where the heart of the action actually is in order to be able to implement the concept of a law and then in turn be able to develop the economy.

What is a good model for implementing a law in developing small countries like Mongolia?

I think the system here is a reflection of both the greatest strengths and occasional weaknesses. Mongolia made it its transition to democracy, so, therefore, Parliament is very responsive (some people might say reactive) to popular sentiment. That is fine. That is one of the attributes of democracy, and that is very good.

Though, at times this leads to Parliament reacting very rapidly to an issue and enacting a law without really considering all the consequences. What other countries will do is [different from] the process used here, which usually involves a working group. The problem with working groups is that it's everyone's responsible, but no one's really responsible. You have drafting done in a patriotic fashion, and, at times, no one or two people taking responsibility for the final version of the law.

We would have to move away from the working group concept because I find that it generally tends to slow any project down, whether it's looking at investment in a power plant or drafting a law. "Too many cooks spoil the soup" is the old phrase. I think that is what happens here. But also what I think is needed here is enhanced appreciation of legislative drafting. By that I mean the specific style by which one writes a law.

When a lawyer tries to write a contract, if it doesn't really have the substance, the technical aspects, to make it as enforceable as the parties wish it to be, when there is a dispute it winds up being unworkable because you can't interpret it as a contract. When you write a law, there is a similar process. You have to go forward and draft the law in accordance with a particular style of writing, with a particular anticipation of definitions to make the law as specific and definite as possible, to remove vagueness, and to make sure that the law addresses precisely the social or economic problem that parliament thinks its remedying.

The current strategic investment law is an extremely broad document, and I'm not sure if its breadth necessarily addresses the particular concern that Parliament had when it had been considering it. And then that creates confusion.

In other jurisdictions you will find a more finely honed process of how to write a draft law. You usually don't find a group of people doing it, but one or two people who are drafting it in response to a specific legislative objective. From there it often comes down to a process of being able to have consultations with the public, the business sector (which may be involved), private individuals, and sometimes scholars.

But ultimately, if it is to be a commercial law, the whole focus needs to assist people in business with their decision making process. They are sitting down thinking out a particular business plan. What they need to do is to say to themselves, what does this law tell me I should do. If I understand that, then I can make a decision whether I should pursue this business activity. That is the essential purpose of a law. That is what a properly drafted law must do. There are times where that is not achieved here, as well as other jurisdictions.

What do you think about Mongolian policymakers making laws in their own interest, as they often are running their own business behind the scenes?

I do know that a conflict of interest law has been passed. I don't believe that it has been drafted as strictly as it is ought to be. Quite simply, there is this regrettable tendency of people to pursue laws not for the public good but for personal their own personal advancement, or the advancement of family members. One aspect of all of this is this has to become something that is wildly, sociably unacceptable. Anyone who would aspire to be a politician in other jurisdictions would disqualify himself with that behavior. Firstly, there needs to be a social change in people's thinking here. The other side of it is there needs to be much stricter laws.

The current version of conflict of interest of law speaks about one individual. Well, what if you pass a law and it supports your family or someone else. That is outside the scope of the law. Someone gets away with that.

What is your opinion on the foreign investment law?

One of the problems is that usually Mongolian Parliament is very reactive to certain events. There have been laws in the past that were enacted where, for environmental concerns, a law was passed, but it was too broad. We were seeing same thing with the strategic investment law. It is a response to Chalco. (The Alumnium Corp. of China)

That reactive fashion is not a good way of being able to implement laws. But rather, it's better trying to be able to have a thought-out policy that is implemented over time. Most people say the strategic investment law has been considered now for over two or three years. But come on, we all know what triggered it: the reaction to Chalco. I share the concerns about potential Chinese aggression through economic penetration in Mongolia. I lived in China for 18 years. I understand that is a realistic concern. But it is far better to have the discipline to think out broader policies and have the implementation of those plans in the abstract than just reacting to one problem and passing something that is too broad.

It sends a very mixed message to the international community. In the one hand, "please invest to Mongolia". On the other hand, "you have to comply with laws, which is not clear, and if you don't there are very severe penalties". The idea is not bad but the environment requires more refinement and sophistication. If the purpose of the law is to prevent Chinese investment, but not say so, there are other ways a law could be facially neutral but would slowdown Chinese investment. For example, proof of Chinese government approval in a foreign investment project in Mongolia is a requirement in Chinese law that is never gotten. People just go forward with the projects here without getting their own internal approvals. If you require that to be presented and they don't have that, that stops the flow of foreign investment.

Although Mongolia is one of the biggest mining destinations in the world, are we still dealing with small investors? Are big investors still watching and waiting before entering Mongolia?

For the most part, it has been small investors that have been attracted here. We started to see large investors (Rio Tinto and Ivanhoe are the obvious examples) and there are others looking very seriously at the Mongolian market.

It's not just mining companies, but companies that support what mining companies do, whether it is building power stations or supplying local motives or construction. Our own client list consists of quite a few Fortune 20 companies, but the problem now is that this law seems to have taken away the red carpet. The law has a lot of vagueness, and foreign investors anywhere don't like uncertainty. If your law can't say what the process is to comply with and the law has severe penalties you would actually feel uncomfortable about investing a lot in a particular country. I do worry that sometimes people (worry ) foreigners are coming here. It's true that they are, but it hasn't reached a stage of extraordinary development. There are a number of mines coming together, but we are still not at a stage where the volume of foreign participation has already produced a lot of wealth.

Until the capital comes in to get those minerals and metals out of the ground, those things are just rocks. That's dirt in the ground of absolutely no value. To say, well we are going to make it more difficult to get foreigners investors to get this wealth, then how does one get at it? If it remains something unextracted, it remains valueless. How do you materialise that value?

People think in some ways that more wealth has materliased then the case actually holds. And obviously there is concern over what will be the future direction of the country. You are looking at people who have lived a traditional nomadic life being compelled to accept a sedentary existence. The challenges that involves, in terms of really changing your role as someone who supports a family and all these new developments that didn't exist in the past, has a lot of confusion and concern. All that is understandable, but in terms of calmly and passionately discussing describing the circumstances, people do not have an exaggerated view of foreign colonisation of Mongolia.

What do you think about the current corruption law of this country?

I think it is very insufficient. But even if the law was more strenuous, it is a question of enforcement. More importantly, before enforcement is the question of having this accepted as a forbidden social vice. Society shaming people for being corrupted is the first step in terms of creating a mechanism of enforcement and a will to draft laws seeking enforcement.

In some ways it is a question of instilling a certain sense of ethics and integrity in society. It is an issue that starts off with education in order to be able to encourage people to take a viewpoint that is tied to integrity with their studies. I heard there were people who were taking the Mongolian lawyer exam last year and they were openly cheating. That is something that just couldn't happen in other parts of the world. That would be socially unacceptable, a lawyer starting his career by cheating to get qualified. It's a need to be able to create that social sense, that ethical aspect, in order to be able to give the will to the governmental system to implement anti corruption laws.

As a lawyer, what ideas for amendments to laws that should be made first do you have?

The ones I would look to first would be very narrow things that impact my clients. But there are certain ambiguities in the revised company law that should be fixed. I feel that there are certain administrative procedures that need to be implemented. For example, there are various types of collateral that the law envisions there is a registration process. The state authorities haven't implemented the process for those types of collateral. This would be a very easy way to enhance lenders' comfort in issuing loans to Mongolian companies to fix these things. So the things that are at the forefront in mind are usually pretty mundane things that relate to business but also slow down business.

Link to article

 

Paleogeographic reconstruction of a late Paleozoic arc collision zone, southern Mongolia

June 21 (GSA Bulletin) Matthew J. Heumann and colleagues present the first published collection of detrital zircon geochronology results from southeastern Mongolia as well as a detailed field investigation for two areas within the region, Bulgan Uul and Nomgon. Results show the first radiometric age constraints on Permian strata for Bulgan Uul and Nomgon and provide strong evidence for these deposits having once been part of the same ocean basin, which is now bisected and offset in a left-lateral sense across the East Gobi Fault zone. This paper contributes to the growing volume of published research for southeastern Mongolia, which until the late 1990s had largely gone unnoticed in the geologic community. It also adds to the understanding of the tectonic and depositional history for the region, while highlighting many of the inconsistencies in previous tectonic models for central Asia.

Link to article

 

US government seizes 'Ty' the dinosaur in NY

NEW YORK, June 22 (AP) -- The U.S. government seized a rare dinosaur skeleton Friday in what observers for the Mongolian government and a dinosaur expert called an important step toward returning the skeleton to its home in Mongolia.

Wooden crates holding pieces of the Tyrannosaurus bataar fossil were loaded onto a white truck at a Queens storage center shortly before it was driven away to a facility whose location was not disclosed.

"We are one step closer to bringing this rare Tyrannosaurus bataar skeleton back home to the people of Mongolia," Mongolia President Elbegdorj Tsakhia said in a statement handed out by his Houston lawyer, Robert Painter, who took photographs of the seizure through a chain-link fence outside the Cadogan Tate Fine Art property where it had been stored.

"Today we send a message to looters all over the world: We will not turn a blind eye to the marketplace of looted fossils," he said.

Bolortsetseg Minjin, director of the Institute for the Study of Mongolian Dinosaurs, took pictures of the exchange as well, saying: "It's a very exciting event. It's just unbelievable. I never expected it would be this fast."

The seizure was ordered by a federal judge in Manhattan earlier this week after the United States requested it in a lawsuit, saying the relics had been brought into the country with documents that disguised the potentially valuable dinosaur skeleton that originated in Mongolia as reptile bones from Great Britain.

Eric Prokopi, 37, of Gainesville, Florida, defended his handling of the skeleton in a statement Thursday, saying he was not an international bone smuggler and that he had worked since bringing the bones into the country in March 2010 to turn chunks of rocks and broken bones "into an impressive skeleton" that he came to call "Ty."

"I can wholeheartedly say the import documents are not fraudulent, a truth I am confident will be brought to light in the coming weeks," he said. "The value was declared much lower than the auction value because, quite simply, it was loose, mostly broken bones and rocks with embedded bones. It was not what you see today, a virtually complete, mounted skeleton."

The bones were valued on import documents at only $15,000, but the skeleton Prokopi put together sold at auction last month for $1.052 million, contingent on the outcome of litigation involving the dinosaur.

Although the buyer has not been disclosed, Painter said he had been told that a New York private gallery owner had made the winning bid.

Prokopi responded to an email request for comment Friday by writing: "My reaction to the government driving away with my dinosaur in a large white truck is the reaction I imagine Indiana Jones had to the ark being put into storage at the end of his film."

After the seizure Friday, Glenn Sorge, a deputy special agent in charge of Homeland Security Investigations for the Department of Homeland Security in New York, said the dinosaur "is now in the custody of the U.S. government and will be stored in a secure location."

The dinosaur was taken from the custody of Heritage Auctions, a Dallas-based company. Its co-chairman, Jim Halperin, said Friday that the company will continue to work with Prokopi.

"We hope arrangements can be made for the public to view it as a museum or other convenient venue while our efforts continue to reach a fair and just resolution for our consignor, who had spent a year of his life and considerable expense identifying, restoring, mounting and preparing what had previously been a much less valuable matrix of unassembled, underlying bones and bone fragments," he said.

The Tyrannosaurus Bataar was a dinosaur from the late Cretaceous period, approximately 70 million years ago, the government said in its lawsuit. It was first discovered in 1946 during a joint Soviet-Mongolian expedition to the Gobi Desert in the Mongolian Ömnögovi Province. Mongolia has enacted laws since 1924 declaring dinosaur fossils to be the property of the government of Mongolia and criminalizing their export from the country.

Mark Norell, head paleontologist with New York's American Museum of Natural History, was not at the seizure but said in a telephone interview that he was one of several people to spread word about the dinosaur's planned sale at auction. He challenged Prokopi's claim that the skeleton may have come from outside Mongolia, saying only some fragments of the same species of dinosaur had been found in adjacent China but no complete skeletons. He noted also that China's laws regarding excavation were stricter than Mongolia's.

He said Prokopi was inaccurate when he claimed the skeleton was professionally excavated and had lost some claws and teeth from the weather and that some teeth had slipped out before burial.

"That's just not the case," he said. "I've excavated fossils my entire adult career. Teeth and claws are about the last things to erode because they're so hard," he said.

Minjin said the skeleton was one of only 10 to 15 full skeletons of the Tyrannosaurus bataar to exist worldwide.

"Finding this kind of complete skeleton is very rare, very special," she said.

Fredrik T. Hiebert, an archaeologist with National Geographic mission programs who attended the seizure, said the likelihood that the dinosaur will end up in Mongolia was vital to the country bordered by China and Russia.

"This is a bigger story than just a dinosaur. It's part of the cultural identity of Mongolia," he said, noting that the nation was re-establishing its identity after decades of Soviet control that ended just over two decades ago.

Still, he said there was no denying the dinosaur had gained a measure of fame. "It's become a rock star, pardon the pun."

Link to article

 

Mongolians Rejoice: iTunes App Store Reaches 32 More Countries

June 22 (All Things D) During his WWDC keynote address, Apple CEO Tim Cook promised that the company would soon extend the reach of the iTunes App Store to 32 more countries. Yesterday afternoon, Apple did just that.

According to an announcement broadcast to iOS developers Thursday, the App Store is now available in a grand total of 155 countries. Among the new 32: Albania, Fiji, Micronesia, Mongolia, Nepal, Swaziland, Tajikistan, Ukraine and Zimbabwe.

Not the largest of territories, but together they bolster the App Store's already impressive breadth. As we reported earlier this month, there are currently about 400 million App Store accounts — with registered credit cards.

Link to article

 

Mongolia's statue of Genghis Khan

June 24 (Flares into Darkness Blog) Mongolia has built a huge statue of Genghis Khan. It stands about 30 miles outside of the Mongolian capital of Ulan Bator. It is intended to be the center piece of a planned tourist park which will feature historical and cultural areas, camping in yurts, a swimming pool, theater and a golf course. When this is all done they plan on plating the statue with gold.

Regular readers will know I've frequently made fun of Turkmenistan's ridiculous building schemes. Granted, a giant gold-plated statue of Genghis Khan appears like something similar, however the Mongolians seem to have a much more rational grip on their tourism planning. They're basing it around their history, culture and landscape, which is a saner approach. They're also making efforts at upgrading their hotel situation which currently sounds pretty dodgy.

Mongolia is a parliamentary republic which sits landlocked between Russia and China. In spite of that, or perhaps because of it, Mongolia has very good relations with the United States. They've provided small contingents of troops to both Iraq and Afghanistan in support of American policy. Travellers from the U.S., EU and Japan can apparently get visas at the airport upon entering the country.

If you're interested in seeing a giant statue of Genghis Khan, or touring a remarkable and isolated country, you can start by visiting their tourist site or reading reviews of other people's travels there. Sadly, no mention of Mongolian Death Worms at either place. 

Link to blog

 

Mongolian Contortion to be Registered in UNESCO

June 24 (UB Post) Among Mongolia's marvelous traditional arts, there are numerous unequalled and extraordinary forms. One of these is a contortionist who shows a magical human flexibility and graceful movements. In the every corner of the world, performances by Mongolian contortionists awe the audience and represent Mongolia with a magnificent display. Even some of the revered audiences want to touch the contortionists' body to know whether they have real human bones or not. A special team is working to make the art of contortion, a one-of–a-kind art in Mongolia, registered with the Intangible Cultural Heritage of UNESCO. Below is an interview with S.Yundenbat, the head of the Department for Intangible Cultural Heritage Protection of the Mongolian National Centre of Cultural Heritage.

-How do you register contortion with UNESCO?

-An individual team is already doing this. UNESCO experts have advised us to clarify and fix some parts of the proposal material and therefore we are working pursuant to it. We have been re-formulating our material a few times in order to make it suitable as there are special criteria on registering things with World Cultural Heritage, UNESCO.

-Who started this work?

-We have started the work after taking advice from the State Prized Artist, the People's Actor B.Norovsambuu, who introduced the art of contortion to the global stage. We are currently working to make magnificent performances which were once performed by the State Prized Artist, the People's Artist T.Tsend-Ayush, D.Majigsuren, registered in UNESCO. N.Batmunkh, B.Norovsambuu of the Foundation for Development of Art and Culture of Mongolia are conducting the work and the staff of the Mongolian National Centre of Cultural Heritage is assisting them.

-Do you think that our contortion will be registered in UNESCO?

-We've had a positive response. However, we can't be sure on whether it will be registered.

Link to article

 

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"Mogi" Munkhdul Badral

Senior Client Manager / Executive Director

CPS International LLC

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CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.

 

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